In the thrilling realm of cryptocurrency and Web 3, there's always something new and exciting around the corner. Today, we're going to explore the landscape of Perpetual Trading in Crypto, a topic that's been making waves in the crypto community. And also get a sneak peek into NFT Perpetuals as well. What is it? How does it work? Why is it gaining so much attention? We'll answer all these questions and more, giving you a comprehensive understanding of this trading phenomenon.
So, fasten your seatbelts and get ready to embark on a journey into the world of Perpetual Trading.
Before we dive into the deep waters of Perpetual Trading, let's start with the basics:
Perp trading is short for "Perpetual Trading," a type of trading in the cryptocurrency market that offers unique opportunities for both seasoned traders and newcomers.
Unlike traditional spot trading, where you buy and hold an asset, perpetual trading allows you to speculate on the cryptocurrency's price without actually owning it. In simpler terms, you're betting on whether the price will go up or down without having to buy and hold the underlying asset.
But how does it work? Let’s break that down.
A perpetual swap is the core instrument of Perp trading. It's a contract between two parties - the buyer and the seller.
Unlike traditional futures contracts that have expiration dates, perpetual swaps don't expire. They are designed to mimic the price of the underlying asset, allowing traders to speculate on its future value.
A perpetual swap contract in crypto is a financial derivative that derives its value from an underlying cryptocurrency, such as Bitcoin or Ethereum.
These contracts are ideal for traders who want to profit from the price movements of cryptocurrencies without owning them.
Note: Here, liquidation is a critical concept. It's the point at which the contract is closed to prevent further losses when the price of the underlying asset moves against the trader beyond a certain threshold.
The purpose of liquidation is to ensure that traders don't accumulate massive losses that they can't cover. It helps maintain the integrity of the contract and ensures that there are sufficient funds to pay out to the winning side.
Let’s understand this with an example.
A perpetual swap contract in crypto is like a bet you make with a friend on a sports game.
As the crypto world continues to evolve, we're witnessing the emergence of new and exciting trading opportunities. One such innovation is NFT perpetual swaps.
NFT perpetual swaps combine the concepts of Non-Fungible Tokens (NFTs) and perpetual swaps.
NFTs are unique digital assets that represent ownership of a particular item, whether it's digital art, collectibles, or virtual real estate. These assets are unique, indivisible, and cannot be exchanged for an equivalent.
Once an NFT is created or "minted," its code is permanently woven into the blockchain and it can be traded on a marketplace with a cryptocurrency like Ethereum, Solana, and so on.
For a complete breakdown of NFTs and their history, check out for Twitter Thread.
Now, imagine applying this uniqueness to perpetual swaps. NFT perpetual swaps allow traders to speculate on the future price of a specific NFT, such as BAYC (Bored Ape Yacht Club) or MoonBirds. The best part? Traders don’t need to own the NFTs to speculate on them.
This opens up a whole new world of trading possibilities. Let’s get into It.
NFT perpetual swaps offer a superior NFT trading experience, focusing on reduced friction, increased leverage, and flexible sizing.
Traditional NFT trading often involves purchasing assets from marketplaces, and incurring transaction costs and royalties.
With NFT perpetual platforms, there's no need to handle underlying NFTs. This streamlines the process, making it more cost-effective and capital-efficient, particularly on Layer 2 networks (Polygon, Arbitrum, etc) with lower fees.
Previously, traders had limited options for obtaining leverage – using spot assets on traditional exchanges or borrowing against their NFT holdings on specific platforms.
NFT perpetual platforms simplify this process by accepting collateral in various currencies and providing a direct environment for utilizing borrowed funds.
For instance, you can open an NFT position using ETH as collateral and settle in ETH when you exit the trade.
NFT perpetual swaps allow traders of all sizes to gain exposure to any NFT collection.
Whether you're trading a small fraction or a significant multiple of a particular NFT's value, like a Bored Ape, these platforms accommodate your needs.
This not only empowers small investors to access NFT markets they might have otherwise missed but also enables larger players to trade significant positions without causing drastic price shifts in the spot market. It's a win-win for traders of all sizes.
As we’ve already seen, NFT perpetual trading is a fusion of NFTs and perpetual swaps, where traders speculate on the future price of NFTs without owning them. Here's how it works:
To kickstart your NFT perpetual trading journey, you'll need to select a platform that offers NFT perpetual trading.
This platform acts as your gateway to this exciting trading world, providing the necessary tools and infrastructure.
But to make it more concrete, let's introduce NFTFN as an example.
NFTFN is a pioneering web3 fintech platform dedicated to building innovative financial products on top of Blue-Chip NFTs, starting with the flagship product – "SuperNova (SNV)."
With SuperNova, traders can go long (bet on price increase) and short (bet on price decrease) on a variety of blue-chip NFTs like Bored Ape Yacht Club (BAYC), Meebits (MAYC), Azuki, and more.
Once you've chosen a platform like NFTFN, you can then select an NFT or an NFT Index that is available to speculate on.
With the right platform and NFT at your side, you're ready to dive into the action.
Here's how the trading process works:
Let’s understand with an example:
You believe that the value of the BAYC NFT collection is going to rise in the near future. So, you enter into a long perpetual swap contract (position) on a platform strike price of 100 ETH.
This means that you are betting that the price of BAYC will rise above 100 ETH in the future.
If you are correct, and the price of BAYC rises to 120 ETH, your contract will be worth 20 ETH. You can then close your position and take your 20 ETH profit.
Perpetual contracts have gained immense popularity and for good reason. Let's explore why they've become a favorite among traders.
Perpetual Trading in Crypto, including NFT perpetual swaps, has added an exciting dimension to the world of cryptocurrency trading. It offers flexibility, 24/7 access, and the potential for profit, but it also comes with risks that need to be managed effectively.
Whether you're a seasoned trader looking to diversify your portfolio or a newcomer eager to explore the crypto market, understanding the mechanics of perpetual trading is crucial. Start small, practice, and always keep learning. By doing so, you can navigate the thrilling world of perpetual trading with confidence and make informed decisions to achieve your financial goals. Happy trading!