GooseFX Whitepaper
Search…
⌃K
📝

DeFi Derivatives

After the completion of our core features, based on user demand we will be looking into the following features.

Perpetual Futures

What are Perpetual Futures?

  • Perpetual Futures are a form of derivative contract between two parties with no expiration date and no deliverable underlying asset.
  • Traders may go long (increased exposure to positive price movement) or short (increased exposure to negative price movement).
  • Users may also utilize leverage with the risk of liquidation of their deposited collateral.
  • In order for this market to exist the users that are long must pay the users that are short in the case of positive funding rate and vice-versa in the case of negative funding rates every hour to maintain a price close to the oracle price
  • Funding is collected hourly based on the ratio between longs and shorts. It is calculated using a difference between an hourly TWAP of mark price and an hourly TWAP of the index price, normalized over 24 hours.
-where index price is the price of the asset and the TWAP (mark/index) is restricted to 0.95-1.05
  • index price = oracle price
  • profit and loss are calculated using the following equations:

Why Trade Perpetual Futures?

  • Users can perform hedging strategies
  • Users can take advantage of arbitrage opportunities
  • Increased buying power and capital efficiency due to leverage
  • Users can short the underlying asset
References and Further Reading

Risks

  • Just like any financial instrument, option vault strategies have risk, and thus these strategies can suffer impermanent loss.
  • In the case of covered call strategies, the vault may incur a loss if the price of SOL is above the strike price of the call options at the time of expiry. If so, the options are deemed to have expired in the money and can be exercised for the SOL locked by the vault, resulting in a potential loss in SOL terms for the period.
  • In the case of put selling strategies, the vault may incur a loss if the price of SOL is below the strike price of the put options at the time of expiry. If so, the options are deemed to have expired in the money and can be exercised for the USDC locked by the vault, resulting in a potential loss for the period.
  • Strike prices are chosen such that these events are rare.