Some time ago, I believed there was no sense to do any calculations about the future economy of the protocols - there were a lot of circumstances yet to be determined. The landscape has changed since then - there are some projects that flourish and provide real earnings for the holders or stakers now. Even though I’m pretty sure that some of my calculations will be wrong, we can at least credibly suggest how is hard will be for the project to generate cash flow and achieve sustainability. So I called this type of report a minimum viable projection.

The project

Perpetual protocol is the derivative dex protocol, providing perpetual futures contracts (for any asset in theory). The team has developed a breakthrough vAMM design, so even though the protocol utilizes AMM (Uniswap-like xyk curve), there is no need for liquidity providers. There are 13 pairs currently listed and the team is going to release a possibility for 3rd parties to list any asset soon (something like Curve’s fabric). Currently, Perpetual protocol works on top of xdai chain, but the team is  considering the support of other networks or rollups.

I want to focus on tokenomics in this research, but there is one important part of the research that has to be highlighted - the team. I’m biased here (since I’m a Perp holder), so let’s stick to the facts:

Dex futures protocols have so much room to grow. In cryptomarkets, futures have 2-3x higher volume than spot markets. In the last 3 months, decentralized exchanges had 2bln$ daily average volume, so we can expect 1bln$ daily volume for the futures dexes in the near future for a start.


There is 54.8% of total circulation reserved for ecosystem and staking rewards, but we don’t know how tokens will be divided between these purposes (protocol should also have sufficient spendings to provide the growth), so I used the current inflationary rewards (150000 perps/week) for the first and second years and excluded anticipated revenue (based on the projected price). Also, I added 7 mln, 5 mln, and 3 mln respectively for three years for growth purposes.

Regarding staking amount, I took the current amount of the staked tokens for the first year, applied the current “staked tokens/tokens in circulation” ratio to the estimated amount of the tokens in circulation for year 2, and added 50% to that amount.

Now let’s move to the research itself.

Value extraction vs inflation

So the basic question is how the token itself accrue value from the protocol’s growth?

Besides being a token to govern the protocol, perp can be staked and 50% of all protocol’s earnings seized as staking rewards (the remaining 50% go to the insurance fund, which is also beneficial for a protocol and token value). There are also inflationary perp rewards allocated for the stakers and bear in mind that these rewards are not completely similar to usual staking or mining rewards - the latter can be considered as “the last mile” of the value transition from a protocol to its participants, while perp rewards increase your share in the revenue distribution.

Currently, the average daily volume is at a level of 48mln$, and it is a quite good result, considering it’s been alive for slightly more than 3 months. The team aims to reach 300 mln$ daily volume in a year, which is ambitious, but I think it is doable in the current market - after improving UX/UI, adding support for more chains/rollups, and launching more products like leveraged tokens there should be much more than 100-200 average daily users.