Parameters Adjustment: Decreasing the Max Borrowing & Funding Rate to Truly Become the Most Affordable Decentralized Leveraged Trading Platform
Dear Dragons 🐉,
Since our official launch in November, our team at Perp88 has remained committed to bringing the best experience to our users whether in regards to the application interface or the user economics.
While we have implemented multiple rounds of UI improvement, we have recently conducted an analysis on the costs across the key perpetual DEXes, which you can read about here, and found that Perp88 is the most affordable trading platform among the key comparisons (GMX, Metavault, Madmex). While our transaction fee is significantly lower than our competitors’, we recognized that the carrying cost of opening the position at Perp88 was lower than that of our competitor due to lower asset utilization rate driven by lower trading activity.
As we aim to truly become the decentralized trading platform that offers the best economics for users and are anticipating a potential increase in the trading volume, we plan to make adjustments to the following parameters to help reduce the carrying costs for our traders and truly become the most affordable decentralized leveraged trading platform:
- Borrowing Rate
- Funding Rate
Borrowing Rate 🏦
The Borrowing Rate is the cost that leveraged traders bear when they borrow assets to open a leveraged position. When traders open a leveraged position at Perp88, they are also borrowing funds from the PLP, as the funds are reserved to be paid out to these traders as profits.
We will be reducing the maximum Borrowing Rate from 0.01% per hour to 0.0088% per hour, a decrease of 12%. This is to ensure that the Borrowing Rate of Perp88 is the most competitive within the market. Below is a graph representing the new utilization-based Borrowing Rate model.
You can find more details about the Borrowing Rate here.
Funding Rate 💸
The Funding Rate is the cost that is added on top of the Borrowing Rate to help bring a balance between the long and short open interest (OI) of each listed asset. When there’s a significant imbalance between the two sides of the OI, one side will pay the other, thereby incentivizing more traders to open a position in the direction that the OI is skewed away from, bringing back the balance between the two sides of exposure.
Given that the utilization rate of the assets within the PLP is still within single digits, the risks of PLP being heavily skewed towards one direction of exposure remains low. With that said, we have decided to decrease the Max Funding Rate from 0.0025% per hour to 0.0020% per hour, a 20% decrease, to help reduce the carrying cost for traders when the trading activity on Perp88 is still ramping up.
For more information on the Funding Rate, please click here.
For the updated Funding Fee & Borrowing Fee Emulator post-parameter adjustment, please click here.
Closing Remarks 🙏
The adjustment on the parameters announced today is made to ensure Perp88 remains competitive against other decentralized leveraged trading platforms. After the adjustment, Perp88 is truly much more affordable than all of our competitors across all dimensions.Should there be any changes to the parameters in the future, we will be making an official announcement on all of our socials.
If you have any suggestions on how to improve Perp88 whether in regards to the user-experience or the product feature, please do not hesitate to get in touch with us via Telegram or Discord.
