Introducing Perpetual Protocol V2 — “Curie”

Published on: 01.07.2021

Perpetual Protocol introduced “Curie”, upgrade that dramatically improves capital efficiency and increases fee capture for liquidity providers.

Perpetual Protocol v1 was launched in December 2020, pioneering the virtual market maker model. In less than 7 months, the protocol has facilitated over $19bn in trading volume, making Perpetual Protocol the top decentralized derivatives exchange in the world.

With the release of Curie, Perpetual Protocol honors the pioneering work of scientist Marie Curie. Her work established foundational building blocks used in many scientific domains. Her inspiration drives them in quest to build foundational building blocks for DeFi.

Overview

Next-gen DeFi UX
Curie will launch on Arbitrum, giving users a greatly enhanced UX with fast, cheap and reliable trading. It will launch with cross-margin collateral management, and support for multiple collateral types will follow.
Concentrated liquidity
Curie leverages Uniswap v3 as the execution layer for providing perpetual swaps with highly efficient concentrated liquidity. For makers, our upgraded vAMM will mint virtual tokens (v-tokens) that are placed in Uniswap v3 pools to provide liquidity. For traders, our vAMM will mint v-tokens used for buying and selling using these Uniswap pools.
Permissionless market creation
Curie will empower everyone to create perpetual markets using Uniswap and Chainlink oracles, while greatly expanding the options and benefits available to PERP stakers.

Concentrated Liquidity

In Perpetual Protocol v1, liquidity is spread thinly across all price ranges,resulting in higher slippage for large trades.

The most exciting innovation in Curie is combining Perpetual Protocol’s vAMM model with Uniswap v3 as the execution layer — the outcome is drastically improved capital efficiency for the protocol. This innovation brings the efficiency of Uniswap v3 to Perpetual Protocol, as well as opening the way for further ecosystem integrations thanks to a high degree of composability, such as with 3rd party market making strategy providers.

Another exciting aspect of the Curie upgrade is an all-new class of liquidity provisioning: Leveraged Liquidity Provision. As a maker on Perpetual Protocol, in addition to earning protocol fees, you will be able to apply leverage to your liquidity, opening the door to an exciting range of new LP strategies.

As shown in the graphic above, makers deposit USDC on Perpetual Protocol, and can instruct the clearing house to mint vUSDC with leverage up to 10x (the protocol supports higher leverage, which can be increased via governance).

In other words, depositing 100 USDC will let you create up to 1000 vUSDC tokens. These v-tokens can then be deployed into Uniswap v3 pools created by the protocol. For example, 1000 vUSDC could be deployed as 0.25 vETH and 500 vUSDC (assuming an ETH price of $2000). Makers also choose a price range for their liquidity according to the Uniswap v3 LP model. In this case, the maker has deployed liquidity with 10x leverage.

For traders, while the trading process remains unchanged, trades are now executed on Uniswap using v-tokens. Under the hood, you deposit USDC for trading, and can trade using up to 10x that amount in vUSDC tokens. For example, if you deposit 10 USDC and place a long order with 10x leverage, the clearing house will mint 100 vUSDC and use those tokens to buy vETH from the vUSDC-vETH Uniswap v3 pool, resulting in an effective leverage of 10x.

Cross-margin Mode + Multi-assets Collateral

For traders, Curie uses cross-margin, allowing traders to open multiple positions using their account balance as a common pool of collateral.

At a later date, traders will also be able to use multiple assets as collateral. The design is similar to FTX’s non-USD collateral design and it gives traders more flexibility to express themselves in the market. For instance, trader Alice can use ETH as the collateral to open a long position on the BTC-USDC perpetual market.

Two scenarios can result based on the price movement:

If BTC’s price increases against USD:
She receives profits in USDC after closing her position.
If BTC’s price decreases against USD:
She receives less ETH in return after closing her position.