What is the deal with Perpetual Protocol and Uniswap?

Key points:

  1. There is no partnership between Perpetual Protocol and Uniswap. We built on top of Uniswap v3 smart contracts permissionlessly.
  2. All operations with Uniswap v3 pools holding perpetual tokens must be performed via the protocol clearinghouse. You cannot add or remove liquidity, or swap tokens directly via Uniswap smart contracts.
  3. Liquidity on Perpetual Protocol does not depend on Uniswap liquidity. There can be a small amount of liquidity on Uniswap v3's regular pools, and a huge amount of liquidity for the same asset in the perpetual token pool.
  4. Perpetual Protocol only offers cash settled perpetuals—these are derivatives; you cannot swap for real assets or withdraw the real asset; you cannot provide liquidity in the real asset as a maker. All settlement and liquidity provision is in USDC.

The following is a discussion of why and how we build on top of Uniswap.

Money lego

Perpetual Protocol Curie (v2) permissionlessly builds on top of Uniswap v3, using Uniswap's on-chain infrastructure as a key component of the protocol. This is done to solve a major bottleneck in v1—static liquidity. In addition, building on Uniswap v3 allows Perpetual Protocol to create markets with concentrated liquidity without reinventing the wheel, and makes it easy for partners familiar with Uniswap to integrate with and build on Perpetual Protocol. Classic money lego.

Trading engine

Perpetual Protocol uses Uniswap v3 as a trading engine, so all trades occur on Uni v3, mediated by the Perpetual Protocol clearinghouse. From a trader's perspective, you will trade on Perpetual Protocol, while under the hood actual token swaps are seamlessly happening in Uniswap pools.

Dynamic liquidity

Perpetual Protocol v1 used static, fixed liquidity for each market, and its design made implementing dynamic liquidity very challenging. V2 allows dynamic liquidity by introducing makers (LPs). This means liquidity is provided by dynamic actors who can be responsive to market conditions, ie. place their liquidity in price ranges corresponding to their read of the market. This create a much more stable and sustainable system overall.

Learn more

A deeper look at Uniswap & Perpetual Protocol