Perpetual Protocol and Unslashed Finance partner to protect Perp’s vAMM Vaults

Perpetual Protocol is offering the first Natively Insured Vaults for Decentralised Perpetual Contracts trading by leveraging their newly listed policy on Unslashed Finance!

With this policy, Perpetual Protocol will cover about 2.5m$ of user funds and also offer an incentive of around 2500 PERP tokens to be distributed by the Unslashed DAO over a period 6 months.

The Perp DAO has made the decision to purchase bulk insurance for its own protocol, covering all derivative traders on Perp’s vAMM. In doing so, Perpetual Protocol demonstrates the importance of combining the transparency of self-custody, smart-contract audits and insurance as an additional layer to mitigate risk and cover users.

What led Perp DAO to this unique decision?

Perpetual Protocol is a decentralised perpetual contract protocol for every asset, made possible by a Virtual Automated Market Maker (henceforth referred to as a “vAMM” or “vAMMs”).

Traders can trade with the Virtual AMMs directly without the need for counter-parties. The Virtual AMMs provide guaranteed on-chain liquidity with predictable pricing set by constant product curves. The Virtual AMMs are also designed to be market neutral and fully collateralised.

Perpetual contracts represent by far the largest volumes of trading in crypto and Perpetual Protocol is leading the way in decentralised perpetuals.

While trading, users can use up to 20x leverage long or short, have transparent fees and 24/7 guaranteed liquidity and zero Impermanent Loss but it also comes with a risk: the integrity of smart-contracts.

Smart-contracts can be subject to different types of attacks, many of which exploit vulnerabilities in smart-contract’s code. The losses resulting from technical issues with smart-contracts which could be either code vulnerabilities, errors or omissions in code implementation, or unavailability or failure to access or process deposited funds, is one of the main risks in DeFi, subsequently, resulting in losses for users.

Currently, if an event were to occur involving one or several smart-contracts, the traders would be impacted. Their positions would be undercollateralized and settlement won’t occur as expected. Perpetual Protocol users would then suffer a loss.

On March 19th, a partnership proposal was shared on Unslashed Discord to list a Policy for Perpetual Protocol and add it to the Spartan Bucket.

The proposal and policy were discussed in details, Nick from Perpetual Protocol and Marouane from Unslashed Finance answered the questions which led to an official Governance Proposal and a vote that showed both the support and excitement around this partnership.

With this policy, Perpetual Protocol will cover about 2.5m$ of user funds and also offer an incentive of around 2500 PERP tokens to be distributed to Capital Suppliers over 6 months. Should an event occur, the claim on their policy will cover their users from any potential losses.

Insurance as a competitive advantage for DEXes and AMMs

The status quo within the DeFi insurance industry has been to allow users to buy and handle their own coverage. Historically, protocols have put the burden on their users to insure themselves. When this happens, it is the user who ends up footing the bill, not the protocol.

Perpetuals, as a crypto primitive, are often used by seasoned traders through cash-and-carry strategies for example. These users are also used to managing their risk.
The purchase of bulk insurance for its users by Perpetual Protocol is an important step in bringing more seasoned traders to DeFi.

It offers significant benefits to Perpetual Protocol in several ways:

• It provides a smoother experience for users and fosters inclusivity
• It builds trust between Perpetual and its users and demonstrates how important protecting its users really is
• It sets the precedent that insurance is a must-have

It is our hope that other projects will follow and take the initiative to purchase coverage for its users and helping to transform the current insurance landscape into one that offers inclusion and safety for users across the board.

This partnership is just a step towards that goal. It is our priority to stay at the forefront of the insurance market and make sure that projects have access to the tools they need in order to protect both themselves and their users.

LEARN MORE ABOUT UNSLASHED FINANCE

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