Perpetual Future Proxy

Algorithm

A Perpetual Future Proxy represents a computational method for establishing a forward price discovery mechanism within decentralized perpetual contracts, functioning as a dynamic price feed independent of traditional order books. This algorithmic approach utilizes a funding rate, adjusted based on the difference between the perpetual contract price and a spot index, incentivizing traders to maintain price alignment. Consequently, the proxy’s efficacy relies on robust oracle services and a well-calibrated funding rate formula to mitigate arbitrage opportunities and ensure market stability. Its design aims to replicate the economic properties of traditional futures contracts without expiry dates, offering continuous exposure to underlying assets.