Perpetual Futures Trading

https://app.yieldification.com/perpetual

How it Works?

YDF futures allows you to trade against several large cap assets. You can choose to predict the future price of the asset(s) by putting collateral and going with (long) or against (short) the price of the asset. This action opens a future's position using the collateral of your choice (default YDF) that we support. When you close the position, the platform calculates your PnL and returns back to you your original collateral +/- any profit/loss and fees at closing time.

Mark Price

Asset prices are queried from several high volume sources to aggregate each asset's price in real-time.

The Trading View chart in the interface defaults to the BTC/USDT pair from Binance, which should be used as a guide only.

A chart of the perp platform's mark price will be implemented in the future.

Leverage

Leverage can be enabled to support higher R/R trading for those who desire it. Using leverage when trading provides a means to effectively borrow additional assets to trade above and beyond your collateral temporarily allowing for the upside to potentially be substantial. That being said, the opposite also holds true whereas the risk of liquidation also increases at the same time.

  • Min leverage: 1x

  • Max leverage: 150x

Max leverage per pair can be adjusted based on community feedback and DAO voting.

Using leverage can be risky and the probability of liquidation increases substantially with the amount of leverage being used. Before using leverage please understand the risks and realize you are using our platform and leverage at your own risk.

Fees

All fees except an optional open service fee will be charged and taken out of the collateral used to open a position and can be adjusted as needed to ensure they align with the market.

Open Fee

  • 0.1% of the position size

Close Fee

  • 0.1% of the position size

Borrow Fee

  • 0.008% / hour of the position size paid at position close

Position Service Fee

In order to accommodate network fees, there is a 0.02 ETH service fee to open a position on the Ethereum network. Limit orders on the Ethereum network have an additional 0.002 ETH service fee. If the limit order is closed before a position is opened, only 0.02 ETH will be refunded. Again, this is to accommodate network and automation fees paid by the platform.

There are no service fees for opening positions on the Arbitrum network at this time.

Example: Full Position Lifecycle

Jane opens long position w/ 1000 YDF collateral against the BTC/USDT pair at 5x leverage (i.e. 5000 YDF position size pre fees).

  • Jane's position size before any fees is 5000 YDF. On open, she is charged 0.1% position size, which is 5 YDF total open fees, so her final collateral and position size after opening is 995 YDF (1000 - 5 YDF open fee) & 4975 YDF (995 * 5x leverage) respectively.

  • After 12 hours, the BTC/USDT pair has risen 20% and Jane would like to close her position. She is currently sitting in profit of 995 YDF (4975 * 20%).

  • Her closing fees are calculated as 0.1% position size, 4.975 YDF (4975 * 0.1%), and 2.985 YDF (4975 * 0.008% * 12 hours). 4.975 YDF + 4.776 YDF = 9.751 YDF total closing fees

  • Total returned to Jane on close is 1980.249 YDF (995 YDF principal + 995 YDF profit - 9.751 YDF closing fees).

Collateral: Trading w/ Tokens Other than YDF

How it works

Most decentralized web3 futures platforms support trading with collateral consisting of the actual assets they're trading against (i.e. BTC, ETH, etc.) or a select few highly liquid top 10-20 alts/stable coins. There are a number of benefits supporting this method of offering futures trades, although it limits anyone who would like to open a trade on the platform but has a substantial amount of their capital tied up in unsupported assets.

Through a due diligence process at first and now DAO governance, we are going to support trading on the YDF platform with other collateral besides YDF itself. Some assets will be obvious such as alts (USDC/USDT) and wrapped large caps (WBTC, WETH), but we will support additional collateralized trades through smaller but still very liquid alts such as LINK, SHIB, and others will be considered.

Accounting for Fees

  • Open Fees: Taken out of the original collateral when opening the position.

  • Close Fees: If the position is in loss, closing fees will be taken out of the remaining collateral we return back to you. If the position is in profit, we return all of your collateral minus the open fee above, then fees will be removed from the final amount of YDF we deliver that makes up your final profit.

When trading with collateral other than YDF, we calculate the final amount of YDF to deliver with a 6% spread based on the price of both the collateral asset and YDF, meaning if you have a position that was in 10% profit from the original collateral, you will receive ~9.4% of that exact value of YDF (minus closing fees).

How is Profit Paid?

Profits from all trades will be paid out in YDF regardless of the collateral used to trade. We have created a reliable, safe, and secure off-chain automation process that will monitor the collateral asset and YDF price in a TWAP-like manner to ensure payouts are paid in the appropriate ratio based on profits made from a closed profitable position.

When a profitable position using non-YDF collateral is closed, it could take up to 10-20 minutes for the YDF provided as profit to be delivered to your wallet. We have built an automation process that does price evaluations through oracle and TWAP methods to ensure safety and security of the protocol when converting between collateral & YDF prices to determine how much profit should be provided to users.

Why Allow Other Assets as Collateral?

Allowing traders to use assets besides YDF to trade with allows a number of benefits for the protocol and traders:

  1. Traders don't need to liquidate or swap any tokens from supported collateral before trading. They can freely trade them without any extra steps.

  2. YDF will be able to collaborate with other strong projects and their respective communities for marketing opportunities among other things.

  3. YDF will be able to add strong alts to it's treasury to be used to continue sustaining YDF staking yield, DAO incentives, and other day-to-day operational costs.

Counter Party

The YDF protocol currently serves as the counter party for all trades, and all profits are paid out in YDF regardless of the asset/index being traded against or the asset being used as collateral. This is a unique method of supporting the platform and functionality and has it's own set of both benefits (i.e. collateral collected from any losing trades goes directly to the protocol) and challenges (i.e. the protocol assumes the risk and pays out YDF for profitable trades). We believe the benefits outweigh the challenges and will support the platform and protocol long term. We will make adjustments to both max open interest allowed per collateral supported as needed to ensure the health of the platform long term.

Maximum Profit Payout

The maximum profit payout per trade is 10x the collateral used to option the position. If your position reaches 10x your initial collateral, the position will be automatically closed with profit paid out.

Maximum Collateral Long/Short Spread

As a method to control the downside risk of being the counter party to futures traders, we implement caps on the amount of each collateral asset that can be traded with given the open interest against that collateral. If there is a fairly even split between long and short interest for a position, users can open positions with more collateral, but as long or short interest grows more lopsided, positions will reach a cap where users will need to wait for positions to close before they can open new trades.

Limit Orders

Limit orders allow you to specify a target entry price for a position to be opened automatically once the chosen asset's mark price is above or below the desired price based on the position type.

If the position type is a Long, then the limit order will open a position once the mark price reaches or falls below the desired price.

If the position type is a Short, then the limit order will open a position once the mark price reaches or rises above the desired price.

Trigger Orders (Take Profit/Stop Loss)

You can create take profit or stop loss orders in YDF on any opened position. Just like a position that gets into liquidation status normally, relays are also used to monitor the index price against any configured trigger orders and will close positions that reach those thresholds.

  • Take Profit: closes a position when a position in profit reaches a configured amount of profit.

  • Stop Loss: closes a position when a position in loss reaches a configured amount of loss before it hits a liquidation price.

Position Management

After opening a position, you will able to view it under the My Open Positions section. Selecting Update/Close will allow you to manage your position by giving you the option to add collateral, remove collateral, or close the position entirely.

Adding collateral allows you to manage the position's total position size, leverage and liquidation price.

Removing collateral allows you to take partial profits or losses proportional to the amount of collateral being removed.

By default, positions displayed on the platform will be those on the Ethereum network. Once a user is connected, positions displayed are specific to the network that the user is connected to.

Liquidation

Liquidation occurs when a position has very little (or no) collateral left based on the size of the position and leverage used or fees surpass any collateral left if the position is left open for too long.

Calculating Liquidation Price

The exact liquidation price movement required to liquidate a position can be calculated by taking the price of the asset the position is open against, and dividing that price by the leverage used.

At YDF we will liquidate a position when the price gets 85% to the full liquidation price (i.e. this price below the asset price if it's a long position, or above if it's a short position), leaving 15% wiggle room to accommodate paying fees and any latency/delays with relays and on chain mining to execute liquidation.

pfYDFLiquidationMovement = indexPrice * 85% / leverage
pfYDFLiquidationForLongPosition = indexPrice - pfYDFLiquidationMovement
pfYDFLiquidationForShortPosition =indexPrice + pfYDFLiquidationMovement 

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