Comparative analysis

We aim to decide whether a particular cryptocurrency is bullish or bearish by using a financial derivative: perpetual options. We achieve this by tokenizing perpetual options, so that investor can forge and trade these tokens. There are two token types: call token and put token, which correspond to call and put perpetual options. To understand how they work, we have a price interval that contains the current price of a certain cryptocurrency and we anticipate that the price of this currency will change within this interval. If we work with ETH and in case that the price varies within the interval, one can generate antimatter token(call and(or) put) by providing two types of underlying assets, such as ETH and USDT. Typically, one needs to provide more ETH to generate a call token and more USDT to generate a put token. The cost of producing tokens will vary in order to stabilize the platform.

Perpetual Protocol is a decentralized perpetual contract protocol for every asset, made possible by a Virtual Automated Market Maker. Perpetual protocol enables traders trade with up to 10x leverage. It enables traders to speculate on a type of asset using another type of asset. The algorithm is AB=k,B=AnAB=k,B=An, where A,BA,B are volume of two types of assets, nn is the value satisfying "BB is traded at n times AA", and kk is an invariant. The trader needs to deposit type a asset in order to speculate type b asset. In math, If one supplies a1(a1)a_1(-a_1), he will open long(short) position of amount BkA+a1(kAa1B)B-\frac{k}{A+a_1}(\frac{k}{A-a_1}-B) in type BB asset. In general perpetual protocol is a perpetual contract without expiration date.

Shield is a decentralized risk-free perpetual contract built on ETH, such that traders can speculate. Unlike normal contract trading, shield uses pre-paid funding fee to let trader open position. That is, the trader pre-pays certain amount of asset, which will be shown in his funding fee balance. The balance will decrease each day as the platform takes funding fee. When the balance is zero, the trader either needs to closed his position or to deposit more collateral. For a single position, the risk is finite: the amount he pre-pays and the profit is calculated by gains in speculation-transaction fee-funding fee.

Futureswap is a protocol that traders can speculate one type of crypto asset using stable coin with up to 10x leverage. The liquidity provider will earn FST(Futureswap token) as an incentive to provide liquidity. The trading rules are standard, yet to protect the platform, one needs to pay more significantly higher fees if his direction is in favor of the majority. Typically, when the long and short sides are in balance, the fee is 0.03%0.03\% of the trading amount. However, if the long side is significantly more than the short side, one needs to pay as much as ten times trading fee. Higher fee will decrease the potential profit, thus decrease the incentive to play in this direction.

Among the four different protocols, there are some similarities and differences. Perpetual protocol and shield are perpetual contracts using different algorithms. Perpetual uses a product as an invariance to stabilize the system. while shield limit the amount of money for a trader. Futureswap has similar features to Antimatter, because it has dynamic fees to protect the platform. On the other hand, the dynamic counterpart in Antimatter is the cost to produce tokens. The difference is that Antimatter has price floor and price ceiling. It preserves the feature of a straddle(options), but Futureswap does not.