Perpetual Swaps, the single biggest primitive still missing from the Bitcoin DeFi puzzle, are coming to Bitcoin-based DeFi thanks to Sovryn. Sovryn spotted the gap and reacted accordingly. The original idea to just cherry-pick what is working on Ethereum and take it on the Bitcoin side chain was not an option here. They decided to integrate the RSK 2-way-peg that brings Bitcoin to the RSK network, the Bitcoin side-chain based on which Sovryn perpetual swaps operate.
This article unfolds the history of perpetual futures contracts and their first appearance on big centralized trading platforms such as BitMex. From there, we look at the scalable Bitcoin DeFi version that Sovryn offers for users who prefer privacy and asset control over the comfort provided by centralized platforms.
In finance, a perpetual futures contract, also known as a perpetual swap, is an agreement to non-optionally buy or short a contract that represents an asset and settle the trade in the near or more distant future. Perpetual futures are cash-settled and differ from regular futures in that they lack a pre-specified delivery date and can thus be held indefinitely without the need to roll over contracts as they approach expiration. Payments are periodically exchanged between holders of the two sides of the contracts, long and short, with the direction and magnitude of the settlement based on the difference between the contract price and that of the underlying asset, as well as, if applicable, the difference in leverage between the two sides.
Economist Robert Shiller first proposed perpetual futures in 1992 to enable derivatives markets for illiquid assets. However, perpetual futures markets have only developed for cryptocurrencies following their introduction in 2016 by BitMEX.
In July 2022, perpetual futures entered the realm of Bitcoin DeFi On Sovryn. Sovryn is a platform built on RSK, a Bitcoin EVM-compatible side-chain. Perpetual futures added a significant new feature to the most…
