Perpetuals On-Chain
What Are “On-Chain” Perpetuals
“On-chain” means that positions, margin, settlement, and liquidation are executed via blockchain and smart contracts, rather than centralized exchange systems.This includes:
Margin management
PnL calculation
Funding rate settlement
Liquidation triggers
All handled transparently through smart contracts, oracles, and on-chain logic.
Key Architecture Components
Smart Contracts + Collateral: Users deposit assets (e.g., USDC, ETH) as margin. Smart contracts manage positions, PnL, and liquidation logic.
Oracle Mechanism: Smart contracts rely on price oracles to fetch real-time spot/index prices for calculations.
On-Chain Funding & Liquidation: Funding rates are periodically settled, and liquidation is triggered automatically when margin falls below thresholds.
Liquidity & Leverage Models: Some protocols use AMMs or hybrid systems, rather than traditional order books.
Advantages of On-Chain Perpetuals
Decentralization / Non-Custodial: Users retain control of assets in their own wallets
Composability: Integrates with DeFi (lending, LP, tokenized positions, etc.)
Transparency: Positions, risk, and liquidation data are publicly verifiable
24/7 Global Access: Fully aligned with crypto’s always-on market
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