Power Perpetuals on Perennial
Power Perpetuals are Back! (and with ARB incentives!)
V1 traders may remember the Perennial ETH² market. Perennial V2 has yet to have any power perp markets — until now! Back by popular demand, we’re relaunching power perpetuals, starting with BTC²!
Background on Power Perps
Power perpetuals are the defi-native instantiation of options trading. Power perpetuals will do for options what the Perpetuals Contract (“Perps”) did for futures. One day, liquidity for power perps will dwarf that of any single expiring options contract.
Power perps combine some of the best features of options in a perpetual futures format:
- Asymmetric upside — similar to options payoffs
- One unified contract — no fragmented liquidity, similar to perpetual futures
- No liquidations — leverage without liquidations when trading with full margin
Power perps were introduced back in 2021 through a research paper written by the Paradigm & Opyn teams. Power perps presented an extension of everlasting options (also Paradigm) that simulated an options payoff in a perpetual contract format.
The idea is simple: traditional perpetual contracts trade a linear payoff (x¹) — power perps trade a nonlinear payoff (x²). For example, a Bitcoin power perpetual contract with a payoff of BTC² would track the squared price of Bitcoin.
Power Perps on Perennial
Just as spot AMMs redefined on-chain trading, Perennial will ignite on-chain options trading with Power Perps. Perennial’s modular market framework makes it easy to compose a price feed with any payoff, so constructing a power perp is trivial. Bitcoin will be Perennial’s first power perp live on V2, and shortly after, an ETH power perp will go live.
The first market being launched: micro-BTC². This is a traditional squared perpetual, tracking the price of BTC, normalized by a factor of 1,000,000.
Use cases for Power Perps:
- Options trading, but in a perpetual format — Power perps are structured to mimic a non-expiring options contract.
- Liquidation-free leveraged trading — Similar to an options payoff, power perps have asymmetric upside, capped downside, and no liquidations when trading with full margin.
- Hedging Impermanent loss — Because the payoffs lineup, Power perps can be used to approximately hedge risk in AMM LP positions.
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