Squared ETH Perpetual

Asset

Squared ETH Perpetual represents a synthetic instrument deriving its value from the price of Ether (ETH), amplified by a squared exposure factor, typically traded on decentralized perpetual futures exchanges. This construction allows traders to gain magnified exposure to ETH price movements without directly holding the underlying asset, effectively increasing both potential gains and losses. The instrument’s pricing mechanism relies on a funding rate, adjusted based on the difference between the perpetual contract price and a spot index, managing arbitrage opportunities and maintaining alignment with the underlying market. Consequently, risk management becomes paramount due to the inherent volatility and leverage associated with the squared exposure.