Perpetual Futures

Introduction

Perpetual futures, or perps for short, are futures with no expiry (delivery) date. They remain open indefinitely until the position is closed. Funding payments occur between two counterparties at regular intervals to incentivize the perp price to converge to the underlying index price.

Variational is the world's first protocol to support perpetual futures on any underlying index feed. This includes:

1. Assets traded on centralized exchanges; for example, an underlying index of spot BTC/USDC across a number of exchanges

2. Assets traded on decentralized exchanges; for example, an underlying index of the PANDORA/USDC Uniswap v3 pool current price

3. Coming soon: indices which aren't even physical assets; for example, points and pre-launch tokens, prediction markets, generic time series such as inflation rates, etc.

Index and Mark Prices

Variational maintains robust indices which are calculated from average of the mid prices all exchanges that support the underlying asset. Exchanges with stale data are removed from the index. The prices are always converted to units of USDC. For example, ETH/USDT prices from exchanges are then multiplied by the USDC/USDT index to return a final ETH/USDC index.

The mark price is derived from the index price:

mark price = index price * (1 + funding rate)

The mark price is used for margining, liquidation, and unrealized PnL calculations.

Contract Specifications

Instrument type	Linear perpetual
Contract size	1 unit of underlying spot asset (e.g., 1 ETH)
Index price	Variational oracle index of underlying data feed, in USDC terms (e.g., ETH/USDC)
Settlement asset	USDC
Mark price	index price * (1 + funding rate)
Funding	Paid hourly. Positive number indicates longs pay shorts; negative number indicates shorts pay longs.

Note: all margin requirements and liquidation rules are set on a per pool basis by the users.

Funding rates

Please see the dedicated Funding Ratesdocumentation.