In simple words: a Perp lets you trade based on the price of a token
(like SOL, ETH, or BTC), without actually owning that token.
If you think the price will go up, you go long (buy).
If you think the price will go down, you go short (sell).
A Perpetual Contract, or Perp, is a type of trading tool (called a derivative) that’s kinda like a futures contract, but with no expiration date. That means you can keep it open as long as you want — there’s no deadline to close it.
How Is a Perp Different from Classic Leverage Trading?
With classic leverage (used in traditional finance or some crypto platforms), the idea is:
- You put in, let’s say, $100, and with 10x leverage, you’re controlling $1,000 worth of that asset.
- This boosts your potential profits — but also your risks. If the price moves against you, you can lose your entire $100 super fast.
Perps also use leverage, but with more flexibility.
Using Tokens as Collateral to Reduce Leverage
One cool feature of Perps (especially on platforms like Jupiter) is that you can add more tokens to your collateral to reduce your leverage and lower your liquidation risk.
💡 Simple Example:
- You open a trade with $100 USDC using 5x leverage → you’re controlling a $500 position.
- The price goes the wrong way. You’re getting close to liquidation (which means you’d lose your $100).
- Instead of closing the trade or getting liquidated, you can add more tokens (USDC, SOL, or other accepted tokens).
- This lowers your effective leverage and gives you more breathing room.
🔍 Why is this useful?
- It gives you more control over your position, even if the market goes against you.
- It lets you stay in the trade longer, giving the market a chance to bounce back.
- And you’re not limited to just stablecoins — you can use a mix of assets as collateral.
Upgrades in Perps V2 by Jupiter
Jupiter recently launched Perps V2, bringing a bunch of upgrades compared to V1. Here’s what’s new and improved:
1. Limit Orders
- You can now set limit orders, which means you choose the price you want to open or close your position at.
- This is great if you don’t want to sit at your screen all day watching the market.
2. Dove Oracle (New Pricing Engine)
- V2 uses a new oracle called Dove, co-developed with Chaos Labs and audited by Offside Labs.
- This provides faster, more accurate prices, which helps prevent slippage and trading errors.
3. Lower Trading Fees
- V2 has more competitive fees, making it cheaper to trade compared to V1.
4. Better User Experience
- The interface is cleaner, faster, and easier to use — especially for active traders.
5. More Flexible Collateral Options
- You can now use multiple assets as collateral, not just one specific token. This gives you more freedom in how you manage risk.
