Rage Trade: Capital Efficiency and Passive Liquidity for On-Chain Perps

Perpetual futures (perps) are financial contracts that enable traders to take highly capital-efficient directional positions with indefinite terms. Leverage, like other financial primitives, is a critical component of the DeFi stack as on-chain perps inherit much of the promise and potential of other on-chain instruments, while also offering composable leverage that can be tapped into by other DeFi applications.

This has the potential to unlock a wide range of novel financial products while also broadly boosting capital efficiency in the DeFi ecosystem. Despite their obviously critical role in DeFi, on-chain perps continue to lack a general clarity of product/market fit. As a result, liquidity remains sparse, with still no clear leaders in the space.