Perpetual Futures (Perps)

Trade luxury asset prices with leverage up to 10x without holding the underlying tokens. Our perpetual futures market is the MVP focus as perp volume typically exceeds spot trading by 10-50x.

What are Perps?

Perpetual futures contracts allow you to:

• 📈 Go Long - Profit when prices rise
• 📉 Go Short - Profit when prices fall
• 🎯 Use Leverage - Control $100k position with $10k collateral
• ⏰ Never Expire - Hold positions indefinitely
• 💰 Funding Rates - Get paid to hold contrarian positions

Why Perps for RWA?

Lessons from Crypto

Hyperliquid Success:

• Spot volume: $500M/day
• Perp volume: $5B/day
• Ratio: 10:1 perp dominance

Why this matters for luxury assets:

• Dealers need hedging tools (inventory risk management)
• Traders want leverage without custody hassles
• Market makers earn funding rate premiums
• Protocol generates sustainable fees (0.05-0.1% per trade)

How It Works

Opening a Position

// Long Position (bullish)
openPosition({
  asset: RWA_ASSET_PERP,
  side: LONG,
  size: 10, // 10 units worth
  leverage: 5x,
  collateral: 30000, // $30k USDC
  price: 150000 // $150k per unit
});

// Short Position (bearish)
openPosition({
  asset: RWA_ASSET_PERP,
  side: SHORT,
  size: 5, // 5 units worth
  leverage: 3x,
  collateral: 50000, // $50k USDC
  price: 150000 // $150k per unit
});

Position Mechanics

Long Example:

Entry Price:     $150,000
Position Size:   10 units (notional: $1.5M)
Leverage:        5x
Collateral:      $300,000 USDC
Liquidation:     $120,000 (-20%)

If price → $165,000 (+10%):
Profit = $150,000 (10% × $1.5M × 5x leverage)
Return = 50% on collateral

If price → $120,000 (-20%):
Position liquidated
Loss = $300,000 (100% of collateral)

Short Example:

Entry Price:     $150,000
Position Size:   5 units (notional: $750k)
Leverage:        3x
Collateral:      $250,000 USDC
Liquidation:     $187,500 (+25%)

If price → $135,000 (-10%):
Profit = $75,000 (10% × $750k × 3x leverage)
Return = 30% on collateral

If price → $187,500 (+25%):
Position liquidated
Loss = $250,000 (100% of collateral)

Funding Rates

What are Funding Rates?

Funding rates balance longs and shorts:

• When more longs than shorts → Longs pay shorts
• When more shorts than longs → Shorts pay longs
• Paid every 8 hours
• Typical range: -0.1% to +0.1% per 8h period

Funding Rate Strategy

Arbitrage Opportunity:

Setup:
- Spot price: $150,000
- Perp price: $152,000 (premium from longs)
- Funding rate: +0.05% per 8h

Strategy:
1. Buy 1 watch on spot: $150,000
2. Short 1 watch on perp: $152,000
3. Collect funding: $76/8h ($228/day)
4. Annual funding: ~$83k (55% APR on $150k)

Risk: Price movement, but hedged position

Current Funding Rates (Mock)

Asset Category	Funding Rate	Direction	Annual Yield
Tier 1 RWA_PERP	+0.03% / 8h	Longs pay	~32% APR
Tier 2 RWA_PERP	-0.02% / 8h	Shorts pay	~22% APR
Tier 3 RWA_PERP	+0.05% / 8h	Longs pay	~54% APR

Trading Features

Leverage Options

Leverage	Risk Level	Use Case
1-2x	Low	Conservative hedging
3-5x	Medium	Active trading
6-10x	High	Speculation

Order Types

Market Order

marketOrder({
  asset: RWA_ASSET_PERP,
  side: LONG,
  size: 5,
  slippage: 0.5%
});

Limit Order

limitOrder({
  asset: RWA_ASSET_PERP,
  side: SHORT,
  size: 10,
  price: 155000, // Execute only at $155k
  postOnly: true // Maker order only
});

Stop Loss / Take Profit

stopLoss({
  positionId: "0x123...",
  triggerPrice: 140000, // Close if drops to $140k
  orderType: MARKET
});

takeProfit({
  positionId: "0x123...",
  triggerPrice: 165000, // Close if rises to $165k
  orderType: LIMIT
});

Liquidation Mechanism

Liquidation Price

Your liquidation price depends on:

• Entry price
• Leverage used
• Maintenance margin (5%)

Formula:

// For LONG positions
liquidationPrice = entryPrice × (1 - 1/leverage + maintenanceMargin)

// For SHORT positions  
liquidationPrice = entryPrice × (1 + 1/leverage - maintenanceMargin)

Example:

Long Position:
- Entry: $150,000
- Leverage: 5x
- Liquidation: $150,000 × (1 - 0.2 + 0.05) = $127,500

Short Position:
- Entry: $150,000
- Leverage: 5x
- Liquidation: $150,000 × (1 + 0.2 - 0.05) = $172,500

Insurance Fund

Protects against bad debt:

• Funded by: Liquidation fees
• Size: $2.5M (5% of total TVL)
• Purpose: Covers underwater positions

Use Cases

Use Case 1: Dealer Hedging

Problem: Luxury asset dealer has $3M inventory risk

Solution:

Physical Inventory: 20 luxury assets @ $150k = $3M
Hedge: Short 20 RWA_ASSET_PERP at $150k

Scenario A: Price drops to $135k (-10%)
- Inventory loss: -$300k
- Perp profit: +$300k
- Net: $0 (fully hedged)

Scenario B: Price rises to $165k (+10%)
- Inventory gain: +$300k
- Perp loss: -$300k  
- Net: $0 (fully hedged)

Result: Dealer eliminates price risk, can focus on sales

Use Case 2: Speculative Trading

Thesis: Luxury asset prices will rise 20% in 6 months

Strategy:

Capital: $50,000 USDC
Leverage: 5x
Position: Long 1.67 units @ $150k = $250k notional

If correct (+20%):
- Price reaches $180k
- Profit: $50k (20% × $250k)
- Return: 100% on $50k collateral

If wrong (-15%):
- Price drops to $127.5k
- Liquidated
- Loss: $50k (100% of collateral)

Use Case 3: Yield Farming

Strategy: Collect funding rates on hedged position

Setup:
- Spot: Buy $300k RWA tokens
- Perp: Short $300k RWA_ASSET_PERP
- Funding: +0.04% per 8h

Daily Income:
- Funding: $300k × 0.04% × 3 = $360/day
- Annual: $131,400 (43.8% APR)

Risk: Minimal (market-neutral hedge)

Fees

Fee Type	Rate	Notes
Trading Fee	0.05-0.1%	Maker/taker
Funding Rate	Variable	±0.01% to ±0.1% per 8h
Liquidation Fee	0.5%	Goes to insurance fund
Overnight Holding	0%	No expiry fees

Risk Management

Position Limits

Account Tier	Max Position	Max Leverage	Maintenance Margin
Retail	$500k	5x	20%
Professional	$5M	10x	10%
Market Maker	$50M	3x	5%

Auto-Deleveraging (ADL)

If insurance fund depleted:

1. Identify most profitable positions
2. Partially close to cover bad debt
3. Compensate at bankruptcy price
4. Rare event (less than 0.1% of trades)

Circuit Breakers

Trading halts if:

• Price moves >15% in 1 hour
• Funding rate exceeds ±0.5% per 8h
• System detects oracle manipulation

Advanced Strategies

Basis Trading

Capture spot-perp price differences:

Spot: $150,000
Perp: $152,000 (1.33% premium)

Strategy:
1. Buy RWA tokens on spot: $150,000
2. Short perp: $152,000
3. Wait for convergence
4. Close both positions
5. Profit: $2,000 (1.33%)

Funding Rate Arbitrage

Exploit funding rate imbalances:

TIER1_RWA_PERP: +0.05% funding (longs pay)
TIER2_RWA_PERP: -0.03% funding (shorts pay)

Strategy:
1. Short Tier 1 asset (collect funding)
2. Long Tier 2 asset (collect funding)
3. Market-neutral exposure
4. Collect from both sides

Leveraged Yield

Amplify vault returns with perps:

Capital: $100k
Allocation:
- $50k in Conservative Vault (12% APR)
- $50k collateral for 3x long perp

If market +15%:
- Vault: $6k profit (12%)
- Perp: $22.5k profit (3x × 15%)
- Total: $28.5k (28.5% return)

Market Data

Open Interest (Mock)

Asset Category	OI (Notional)	Long/Short Ratio	24h Volume
Tier 1 RWA_PERP	$45M	1.3:1	$12M
Tier 2 RWA_PERP	$78M	0.9:1	$23M
Tier 3 RWA_PERP	$125M	1.1:1	$38M

Liquidation History

Recent liquidations help gauge market sentiment:

• Long liquidations → Bearish pressure
• Short liquidations → Bullish momentum

Next Steps

• Start Perp Trading - Tutorial for beginners
• Dealer Hedging Guide - For professionals
• Risk Calculator: Calculate liquidation prices and manage risk