Perpetual Futures Contract

​

Introduction

Perpetuals on STRIKE are a bit different than traditional perpetual futures while retaining the same benefits. Users will still be able to gain profits in perpetuity whilst utilizing leverage to amplify their gains.

Every 1 hour, the price of the underlying asset will be recorded. After 1 hour, the price of the asset is compared. If during this 1-hour period the asset has moved up in price, the long side wins; if the asset has moved down in price, the short side wins. No positions can be entered or closed within 10 minutes of the current funding period ending.

The price of your contract is calculated as:

underlying asset price × initial contract size × leverage

​

How the Platform Works

​

Key Features

1. Leverage Factor λ: Amplify your exposure to price movements without committing the full notional amount. Leverage magnifies both gains and losses.

2. Notional Value: The total value of your position, calculated as the initial margin (your invested capital) multiplied by the leverage factor.

3. Percentage Price Change (ΔP / P₀): The change in the asset’s price over the trading period, expressed as a percentage.

4. Fixed Minimum Fee (20%): An additional fee that the losing side pays to the winning side in each funding round, ensuring significant payouts even during low volatility.

5. Locked Last 10 Minutes: To prevent people from gaming the system and closing their positions right before the funding period ends. No positions can be entered or closed within the last 10 minutes of the funding period. Traders can still place their positions for the next funding period during this 10-minute lockdown but cannot enter positions for the current funding period.

6. Contract PNL: Traders can exit their position prematurely, potentially for a profit, without waiting for the funding period to end. The value of their contract will be:

underlying asset price × initial contract size × leverage

​

Contract PNL Calculation

The Profit and Loss (PNL) of a contract can be calculated at any time using the following formula:

Where:

• $P_c$ is the current asset price
• $P_e$ is the entry asset price
• $S$ is the initial contract size
• $\lambda$ is the leverage factor

​

Example PNL Calculation

Scenario:

• Trader: Eve
• Asset: ADA
• Entry Asset Price ($P_e$): $1,000
• Initial Contract Size ($S$): 10 ADA
• Leverage ($\lambda$): 5x
• Current Asset Price ($P_c$): $1,100

Calculation:

1. Contract Value at Entry:

   $$\text{Entry Value} = P_e \times S \times \lambda = \$1,000 \times 10 \times 5 = \$50,000$$

2. Current Contract Value:

   $$\text{Current Value} = P_c \times S \times \lambda = \$1,100 \times 10 \times 5 = \$55,000$$

3. PNL:

   $$\begin{align*} \text{PNL} &= \text{Current Value} - \text{Entry Value} \\ &= \$55,000 - \$50,000 = \$5,000 \end{align*}$$

Eve’s position unrealized pnl is $5,000.

​

Payout Calculation Components

• Matched Exposure (E): The portion of positions that can be directly offset between longs and shorts.

• Funding Rate Payout: Reflects gains or losses based on price movements and leverage.

• Fixed 20% Fee: Ensures significant payouts each funding round.

• Total Payout: Total payout from losing position to winning position.

• Individual Contributor Payout:

  Individual payout is calculated as follows:

Example:

If a participant has a notional position of $10,000, and the total winning notional position is $20,000 with a total payout of $6,000, their individual gain or loss would be:

​

Example Scenario

​

Setup

Asset: ADA
Initial Price (P₀): $1,000
Leverage Factor λ: 5x

​

Long Side (Total Notional Positions: $80,000)

1. Alice

   • Initial Margin: $10,000
   • Notional Position: $10,000 × 5 = $50,000

2. Bob

   • Initial Margin: $6,000
   • Notional Position: $6,000 × 5 = $30,000

​

Short Side (Total Notional Positions: $20,000)

1. Charlie

   • Initial Margin: $3,000
   • Notional Position: $3,000 × 5 = $15,000

2. Dave

   • Initial Margin: $1,000
   • Notional Position: $1,000 × 5 = $5,000

Matched Exposure (E):

Unmatched Long Positions:

​

Price Increase Scenario Calculations

Price at End (P₁): $1,050 (5% increase)

1. Percentage Price Change:

2. Funding Rate Payout:

3. Fixed 20% Fee:

4. Total Payout:

​

Allocation of Gains and Losses

Long Side (Winning Side)

• Alice’s Gain:

• Bob’s Gain:

Short Side (Losing Side)

• Charlie’s Loss:

• Dave’s Loss:

Comparison Table

Participant	Platform Gain/Loss	Holding Gain/Loss	Difference	Platform ROI	Holding ROI
Alice	+$3,125	+$500	+$2,625	31.25%	5%
Bob	+$1,875	+$300	+$1,575	31.25%	5%
Charlie	-$3,750	-$150	-$3,600	-125%	-5%
Dave	-$1,250	-$50	-$1,200	-125%	-5%