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Perpetual futures, explained

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Re: Perpetual futures, explained

#31

Post by yieldcrv »

michaelmrose wrote: post #28
yieldcrv wrote: post #26

Earlier quoted context omitted.

whats more important to me is that you don't have to ask anybody if you can deploy an entire financial services suite and not only will other people worldwide use it immediately, they will also pay for all your infrastructure costs as they update the chain state with every transaction fee that they pay the permissionless nature means you can deploy anything as cenralized or decentralized as you want, and its up to co…

Isn't basically virtually 100% of the money that isn't crime adjacent web 2.0 implying it can compete?

What are you asking? Can you rephrase that in a different way?

Can I leverage trade derivatives and also earn fees from liquidity pooling with Robux?

Re: Perpetual futures, explained

#32

Post by jhancock »

I spent a few years leading dev on decentralized exchanges, building bridges to other chains and building a sophisticated margin system on top of the trading pools.

A few things I think I've learned:

In its current state, most retail investors are simply supplying to the sophisticated investor.

Although some DeFi projects make a genuine effort to provide analysis tools to level the playing field, it's not nearly enough.

The safest least volatile yields in DeFi are lending your stable coins into a system such as aave. The yield is not far from a high yield USD savings account.

Exchanges such as Uniswap may be the most important legit tool in DeFi. The biggest problem is the liquidity provider's ability to protect their downside...so the investor adds on more sophisticated monitoring/hedging schemes. This gets us back to the retail investor being at a severe disadvantage.

Re: Perpetual futures, explained

#33

Post by HWR_14 »

Why would I want a perp on BTC when I can just buy the coin? The example quoted the price of the perp as (close to) the same as the price of BTC, so if I'm not getting leverage why not just buy the coin and avoid counterparty risk?

Re: Perpetual futures, explained

#34

Post by hippich »

It appears to me that majority of the article is about (unregulated) leveraged trading, with perps being an instrument to get leverage. I seen similar stories of blowing up outside us in forex market, for example, where no one were talking about futures, it was just 100x leverage that was biting many (most?) traders.

Re: Perpetual futures, explained

#35

Post by nroets »

HWR_14 wrote: post #33

Why would I want a perp on BTC when I can just buy the coin? The example quoted the price of the perp as (close to) the same as the price of BTC, so if I'm not getting leverage why not just buy the coin and avoid counterparty risk?

You can buy (go long) a BTC future with only $10,000 or less of collateral. So you can get lots of leverage.

Another reason is that the future may be trading slightly below the spot price of BTC due to lots of traders shorting.

Re: Perpetual futures, explained

#36

Post by wmf »

HWR_14 wrote: post #33

Why would I want a perp on BTC when I can just buy the coin? The example quoted the price of the perp as (close to) the same as the price of BTC, so if I'm not getting leverage why not just buy the coin and avoid counterparty risk?

Because the exchanges offer 20x leverage on perps but not on spot. In theory perps can have deeper liquidity because they can go beyond the 21M BTC limit. If you don't care about those factors then you shouldn't trade perps; they aren't intended to be magically superior to spot.

Re: Perpetual futures, explained

#37

Post by wmf »

spir wrote: post #29

I don't think many people on HN realize how globally systemically important public blockchains are on track to become, especially Ethereum. The understandable hatred of the casino and many scams has blinded most of HN as to the true potential of the technology and its associated new public institutions. That's what a decentralized public blockchain is, a new kind of public institution. One small example of this is th…

I guess you could help educate us by giving some non-gambling and non-criminal examples of innovation powered by Ethereum that justify its importance.

Re: Perpetual futures, explained

#38

Post by Karrot_Kream »

jhancock wrote: post #32

I spent a few years leading dev on decentralized exchanges, building bridges to other chains and building a sophisticated margin system on top of the trading pools. A few things I think I've learned: In its current state, most retail investors are simply supplying to the sophisticated investor. Although some DeFi projects make a genuine effort to provide analysis tools to level the playing field, it's not nearly enou…

Yes if you start doing analysis on DeFi and a lot of cryptocurrency markets, you can see very quickly that retail investors ("dumb money") are just providing liquidity to the smart money. There's a lot of unsophisticated money in these markets which makes it pretty fun to compete as someone trying to be smart.

It's even more brutal in the more established, traditional markets though. Obviously if you're going long and managing a portfolio that's a different perspective, but it's very hard as an outsider to compete with the smart funds in the world. You might be smart but most of those funds are very smart, well capitalized, and have a very deep understanding of market structure.

Re: Perpetual futures, explained

#39

Post by michaelmrose »

yieldcrv wrote: post #31
michaelmrose wrote: post #28

Earlier quoted context omitted.

Isn't basically virtually 100% of the money that isn't crime adjacent web 2.0 implying it can compete?

What are you asking? Can you rephrase that in a different way? Can I leverage trade derivatives and also earn fees from liquidity pooling with Robux?

BTC almost exclusively enables crime. It's fundamentally too bad at basically everything to replace any part of the real economy. It is almost exclusively used for crime, admittedly fun technological exploration, and gambling on a valuation based not on actual net utility in current context but on perception of future utility that will probably never materialize.

Web 2.0 based on boring old primitives like ad dollars and banks actually funds things that in real life provide ultimately virtually all the actual utility obtained by the world from software.

You said

> web 2.0 cloud cannot compete with that cost structure and permissionless nature

It appears to me that that is just incorrect on its face because web 2.0 cloud actually DOES compete insofar as its literally everywhere as we speak and web 3.0 is a buzzword from 2014 that has yet to achieve actual meaning.

To rephrase do you feel it is accurate to say that something that represents basically all the real value obtained by network computers doesn't competes with something that provides? What again?

Re: Perpetual futures, explained

#40

Post by Karrot_Kream »

HWR_14 wrote: post #33

Why would I want a perp on BTC when I can just buy the coin? The example quoted the price of the perp as (close to) the same as the price of BTC, so if I'm not getting leverage why not just buy the coin and avoid counterparty risk?

A perp is a future which is different from buying BTC at its spot price. If you remove the "perpetual" aspect of the future and it was a regular future that was settling soon, likewise it would be similar in price but not the same as the underlying. There's lots of uses for futures and they're often used as hedges against various forms of risk, like currency risk.
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