Multicoin Capital Leads $1.8 Million Funding Round for DeFi Project Perpetual Protocol

The DeFi protocol Perpetual Protocol’s team raised $1.8 million in a funding round led by the investment firm Multicoin Capital. At the heart of the project is a virtual automated market maker (vAMM).

Very excited to announce that @multicoincap led a seed round in @perpprotocol

We’ll be sharing more soon, but for now I’ll just say this: https://t.co/UZcecg1KZD is a breakthrough financial construction, and we cannot wait to see how traders trade on ithttps://t.co/uP7mD9NvLc

— Kyle Samani (@KyleSamani) August 25, 2020

In an interview with TheBlock, Perpetual Protocol founder Эньэнь Фэн stated that the project positions itself as “a combination of Uniswap and BitMEX”.

Participants in the funding round also included Three Arrows Capital, CMS Holding and Alameda Research. The funds will be used to launch the protocol in September. It will not be available to U.S. residents.

As the name suggests, Perpetual Protocol is focused on perpetual contracts. Its distinctive feature is the vAMM.

“vAMM implies that there is no real asset inside the protocol. The real asset is stored in the smart-contract treasury that manages all collateral backing the vAMM. This helps support trading with borrowed funds,” explained Feng.

According to the project’s founder, competitors dYdX and MCDEX also support perpetual contracts with leverage, but their pricing is based either on an order book, or on an AMM, or on a combination of them.

Feng asserts that the chosen vAMM model enables reduced slippage.

“Market makers in the constant product (x*y=k) model on Uniswap suffer higher slippage than centralized exchanges because k is limited by the liquidity available. In vAMM, the parameter ‘k’ is set algorithmically, which provides better conditions.”

In the initial phase, Perpetual Protocol will support perpetual contracts on Bitcoin, Ethereum and Chainlink (LINK). In the future, it plans to expand to synthetic assets pegged to gold, crude oil and fiat currencies.

The Perpetual Protocol will introduce a native token, PERP, which will form the insurance fund. If it is depleted, PERP issuance will increase to replenish the fund and cover incurred losses. The token will also be used for staking.

On August 26, the amount of funds locked in DeFi protocols surpassed $7 billion.

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