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Perpetual futures are a financial instrument found only in the vibrant world of cryptocurrencies. Known for its flexibility and potential for high returns, it’s been rapidly gaining popularity amongst sophisticated traders - with no sign of slowing down.
Currently, the most widely traded derivative in cryptocurrency markets is by far perpetual futures. Contributing 90% of the Total Volume Locked across in decentralized derivatives, the flexibility and potential for high returns that perpetual futures offer make them popular amongst traders.
Zenith is a DeFi protocol introducing perpetual futures to the Tezos ecosystem, a market ripe with potential. Now, traders within the Tezos ecosystem have a new way of maximizing their leverage and potentially enhancing their returns.
A new era of DeFi opportunity is on the horizon, and it’s a dawn that promises to be bright.
In essence, perpetual futures (also known as perps) are futures contracts that have no expiration date.
Futures are like a bet between two parties on the future price of an asset or commodity, which takes the form of an agreement to buy or sell this particular asset or commodity at a fixed price in the future.
Here’s a very simplified example of how futures work:
In a month’s time, when the contract is settled - If the price rises above $0.76, Joe takes a profit. If it falls below $0.76, Peter takes a profit.
Crypto futures operate on the same principle.
If Joe and Peter were trading tez futures on a crypto exchange, they wouldn’t be dealing directly with each other.
Instead, they’d interact with a liquidity pool, a pool of funds locked in a smart contract. This pool is there to ensure there’s enough liquidity for the trades to happen smoothly and is filled by liquidity providers (LPs) who earn fees for providing this service.
In this scenario, Joe and Peter are placing their bets in relation to the liquidity pool. However, their profits or losses come from the other traders, not the liquidity pool.
With traditional futures, the concept of an expiry date is a fundamental one. It’s the date when the futures contract must be settled, and the agreed-upon transaction takes place.
Perpetual futures, as the name suggests, are futures contracts that have no expiry date. This means traders can hold their positions indefinitely, allowing them to take advantage of long-term market trends without the need to constantly monitor and renew their contracts.
With a tez futures contract, Joe and Peter (from our earlier example) would need to settle their bet after a month, regardless of whether they believe the price of tez will continue to rise or fall.
On the other hand, with a perpetual futures contract…
Of course, Joe and Peter would need to have enough funds in their account to meet margin requirements. On top of the initial margin they needed to open their position, they also need sufficient maintenance margin, which fluctuates accordingly with changes in the market price.
This flexibility is one of the main advantages of perpetual futures, particularly beneficial in the dynamic world of cryptocurrency trading. It allows traders to adapt to market changes and adjust their strategies on the fly, without being constrained by an expiry date.
As the first platform bringing perpetual futures trading natively to the Tezos chain, Zenith stands to be a catalyst for growth within the ecosystem, connecting and increasing liquidity for Tezos-native projects.
Built on the Tezos blockchain, Zenith brings the advantage of low gas fees to its users - a significant edge over platforms with high gas fees, in a market where cost efficiency can make all the difference.
Zenith is also actively fostering growth within the Tezos ecosystem - we can look forward to Zenith supporting tokens of native projects like Dogami and Plenty, as well as future established partnerships with other projects built on Tezos. Members of the Tezos ecosystem can enjoy better integration with their existing Tezos-based assets and wallets, making for a smoother and more seamless user experience.
The demand for Zenith’s offerings has been validated by their successful launch on the Tezos testnet, where between 1000-2000 people expressed interest, and 400 - 500 people tested and submitted feedback. This is a testament to the platform’s potential and the excitement it has generated within the community.
Most DeFi platforms use Automated Market Makers (AMMs), smart contract platforms which replace traditional order books. They enable the performance of token swaps using liquidity from liquidity providers.
Zenith uses a more advanced version, Virtual Market Makers (VMMs), instead. This means that users require less capital, made possible by VMMs’ use of virtual pools which require no actual assets to create pools.
Beginners can start their journey with a minimum trade amount of $1, which cannot be done on centralized exchanges and many other platforms. For those hesitant to jump into DeFi headfirst, this allows them to dip their toes into a potential world of trading possibilities.
Another exciting feature made possible by VMMs is periodic profit distributions, where Zenith users can also benefit from profits distributed every hour.
Zenith currently offers the XTZ-USD pair, with plans to introduce the ETH-USD pair and the BTC-USD pair upon mainnet launch. Looking forward, they aim to extend their protocol to launch stocks, commodities, and Forex.
Of course, it’s also incredibly exciting that Zenith will be listing the tokens of Tezos-built projects!
A gamification layer to trading is added with Zenith’s leaderboard that keeps track of the profit and loss of all users. Every week, the top users get newly minted $ZNTH tokens. This leaderboard resets every week, adding an element of excitement and competition to the trading experience.
The initial supply will be 10,000,000 $ZNTH, with the allocation detailed in the whitepaper.
$ZNTH is designed to be deflationary - new tokens will only be minted for weekly reward distributions, and distributions will decrease gradually as the supply increases. More burning mechanisms will be implemented in the future to maintain this deflationary nature.
The Zenith team is led by two passionate and experienced individuals who bring a wealth of knowledge and expertise to the table.
Sanket, an Information Technology graduate, has a rich background in blockchain projects. He has lent his expertise to projects like Lords of the Lands and Game Geeks, demonstrating his proficiency in blockchain development languages such as Smartpy, Ligo, and Solidity. His close work with the Tezos India team as a Bootcamp and Hackathon mentor further underscores his deep understanding of the Tezos ecosystem.
Dhiraj Sonawale brings a different but equally important set of skills to the team. As a DeFi enthusiast with over five years of experience in trading Futures and options in Crypto, Indian, and forex markets, Dhiraj’s insights into the world of trading are invaluable. His experience and understanding of market dynamics play a crucial role in shaping Zenith’s offerings.
Together, Sanket and Dhiraj form a formidable team, driving Zenith’s mission to bring perpetual futures trading to the Tezos ecosystem.
