Glossary
Key terms for trading on Perp City.
Participants
Taker: A trader who opens or closes positions against the AMM. Takers go long or short, pay fees to makers, and are subject to funding and liquidation.
Maker: A liquidity provider who deposits into price ranges. Makers earn trading fees but take directional exposure as the counterparty to taker trades.
Creator: A developer who designs and launches markets. Creators define the index, set parameters, and earn a share of trading fees.
Prices
Index Value: The value a perpetual future tracks, derived from real-world data. Updated on-chain with proof of authenticity.
Mark Price: The current trading price on the AMM, determined by supply and demand. The gap between mark price and index value drives funding.
TWAP: Time-weighted average price over a window (typically 10 minutes). Used in funding calculations to smooth out short-term volatility.
Positions
Perpetual Future: A derivative with no expiration. Hold as long as you want. Funding keeps the price aligned with the index.
Margin: Collateral backing your position. Absorbs losses from price moves, funding, and fees. If margin falls too low, you get liquidated.
Margin Ratio: Position health, calculated as margin / notional value. Higher is safer. The inverse of leverage: 0.5 margin ratio = 2x leverage.
Funding: Continuous payments between longs and shorts based on mark/index divergence. Longs pay shorts when mark > index, and vice versa.
Liquidation: Forced closure when margin ratio falls below threshold (5% for takers). Liquidators receive a fee; remaining margin returns to you.
ADL: Autodeleveraging. When liquidation can't cover losses, bad debt is distributed across open taker positions proportionally.
Infrastructure
Beacon: Smart contract that receives external data and verifies it before publishing to the market.
Index Function: The computation that transforms raw measurements into a tradeable index value.
Strobe Protocol: The smart contract infrastructure powering Perp City. Handles data verification and market settlement.
Fees
LP Fee: Paid to makers on each trade (~0.75%).
Insurance Fee: Contributes to the insurance pool (0.25%).
Utilization Fee: Continuous fee from takers to makers based on liquidity utilization.