Introduction:

Perpetual Protocol is a decentralized finance (DeFi) project that operates as a software platform on the Ethereum blockchain, aiming to create a distributed network of computers for users to engage in buying and selling derivative contracts without the need for financial intermediaries. Inspired by Uniswap and Synthetix, it offers leverage trading, short positions, and low slippage by utilizing a virtual automated market maker (vAMM) and collateralization vault. Users rely on the code's execution rather than trusting a specific institution. The platform's native cryptocurrency, PERP, is used for staking and governance, securing the marketplace, and shaping the project's future. The project was initially supported by a Taiwan-based elite team but has since grown into a distributed team with co-founders Yenwen Feng and Shao-Kang Lee. Notable supporters include Binance Labs, Alameda Research, CMS, Three Arrows Capital, Divergence Ventures, Mechanism Capital, and Multicoin Capital.

What is Virtual Automated Market Maker (vAMM):

Perpetual Protocol is a DeFi platform focused on trading futures-like contracts, including cryptocurrencies, gold, crude oil, and fiat. Unlike traditional AMMs, it uses virtual automated market makers (vAMMs) solely for price discovery, not spot exchange. In vAMMs, no real crypto assets are stored within the system. Instead, smart contracts act as a 'Clearing House' and 'Collateralization Vault' to enable leverage on both long and short trades. The Clearing House records traders' positions and sends deposits to the Collateralization Vault to secure trading positions and update prices in the vAMM.

Perpetual Protocol stands out due to its vAMM approach, introducing virtual pools in smart contracts to handle collateral backing and ensuring algorithmically proven liquidity. Unlike AMMs, where liquidity providers share risk, vAMMs offer ever-present liquidity, predictable pricing, unbiased markets, and full collateralization, eliminating the risk of impermanent loss for stakers. Furthermore, the platform allows traders to leverage their positions up to 20X, providing enhanced opportunities for trading futures-like contracts across a variety of assets. The project aims to decentralize market selection through a Decentralized Autonomous Organization (DAO) structure in the future, enhancing the platform's governance and sustainability.

**How to operate in perp protocol interface?
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Perpetual Protocol v2 allows users to trade futures-like contracts with leverage by depositing USDC into the Clearing House smart contract, which gives them 10x virtual USD (vUSD) as leverage. With their vUSD, users can trade or provide liquidity on markets within the protocol, which are based on Uniswap v3. When opening a long order on a market like ETH perpetual, users instruct the Clearing House to use their vUSD to mint vUSD tokens, which are then exchanged for vETH in the Uniswap vUSD/vETH pool.

The counterparty in each trade is a liquidity provider (called "makers"), who deposit USDC into the Clearing House and earn transaction fees for their risk. Makers can specify which markets they want to provide liquidity to and in which price range. To simplify liquidity provision, Perp protocol collaborates with managed liquidity platforms like Teahouse Finance or Visor Finance, where users can deposit stable coins and let the platforms handle the technicalities.

**Why we should use Perp V2?
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erp v2 offers compelling reasons to consider using its platform for trading crypto-assets. Firstly, it is decentralized and open source, enabling users to trade instantly without the need for signups, intermediaries, or custodians. Users maintain full control of their funds at all times, ensuring security and transparency. Additionally, Perp v2 leverages the power of public blockchains and the Optimism L2 scaling solution, providing a highly performant and secure trading experience with fast transactions and minimal fees while operating on Ethereum's Layer 1.

Secondly, Perp v2 provides leveraged exposure to a wide range of crypto-assets. Traders can access up to 10x leverage for both popular and niche cryptocurrencies, allowing them to amplify potential gains in a controlled manner. The protocol's permissionless nature allows for the creation of new perpetual markets through voting by the community or token listing DAO. Moreover, Perp v2 is designed to be accessible, with partnerships with various protocols and wallets, ensuring ease of use for users. Its composable architecture makes it ideal for integration into other protocols, allowing developers to build new financial products and services using Perp v2's perpetual contracts as the underlying asset, further expanding its utility within the DeFi ecosystem.

**Conlusion
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In conclusion, Perp v2 stands out as a decentralized and open-source DeFi platform, offering a highly performant and secure trading experience powered by public blockchains and the Optimism L2 scaling solution. Its innovative use of virtual Automated Market Makers (vAMMs) enables leveraged exposure to a diverse range of crypto-assets, giving traders the potential to maximize gains with controlled risk. The permissionless nature of Perp v2 fosters community-driven growth, allowing for the addition of new perpetual markets through voting. Furthermore, its accessibility through partnerships with various protocols and wallets makes it easy for users to participate in the platform. The composable architecture also allows other protocols to integrate Perp v2, encouraging the development of new financial products and services within the broader DeFi ecosystem. With its robust features and commitment to decentralization, Perp v2 emerges as a promising solution for those seeking a versatile and user-centric trading experience in the DeFi space.

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