Perpetual Markets

SV3 can support derivatives built around a market token's on-chain spot and floor. The two ideas under consideration are easy to confuse, so this page explains them separately.

They use different accounting and carry different risks.

Perpetual futures

A perpetual future lets a trader take price exposure without buying or selling the underlying token through the curve.

• A long gains when the derivative's mark price rises and loses when it falls.
• A short gains when the mark price falls and loses when it rises.
• Collateral covers losses and limits the size of the position.
• Funding can keep the perpetual price close to the underlying market.

Concrete example

Assume the token's canonical spot is 0.025 USDC, its floor is 0.0115 USDC, and a trader posts 20 USDC of collateral to open a 100 USDC long.

A leveraged trader can run out of collateral while the underlying spot remains far above floor. Liquidation risk comes from position leverage and margin rules.

What still has to be designed

A safe perpetual market needs explicit rules for:

• mark price and manipulation resistance;
• margin and liquidation thresholds;
• funding payments;
• maximum long and short open interest;
• bad-debt handling and insurance;
• fees, settlement, and position closing; and
• pause and upgrade authority.

The underlying token reserve remains dedicated to token redemption. Perpetual collateral and risk limits must cover derivative profit and loss separately.

Current-floor calls

A current-floor call is a different instrument. It gives the holder the right to mint market tokens at the floor in effect at exercise.

Suppose:

current floor        $0.01 per token
option amount        1,000 tokens
exercise payment     $10 plus the configured fee

On exercise, $10 enters the underlying market and 1,000 tokens are minted. The live curve spot stays unchanged.

This works by separating actual token supply from the curve coordinate.

Let $q$ be the amount exercised, $F$ the current floor, $T$ actual token supply, $O$ the signed supply offset, and $C=T-O$ curve supply.

Exercise payment:

$$E=Fq$$

Supply after exercise:

$$T'=T+q$$ $$O'=O+q$$ $$C'=T'-O'=C$$

Because curve supply $C$ is unchanged, spot is unchanged. Because $Fq$ enters the reserve, the new tokens' floor liability is backed.

Why this option can use the on-chain floor

Physical exercise uses the token amount and the current contract floor to determine the reserve payment. An external exchange price is unnecessary for that calculation.

The product still needs a separate release to define option issuance, distribution, caps, fees, and interfaces. SV3 v1 implements the signed supply-offset accounting so existing markets can support this later without rewriting their historical curve supply.

What the floor contributes

The underlying SV3 market provides:

• a canonical curve spot;
• a monotonically increasing gross floor;
• permanent token issuance and redemption rules; and
• a supply offset for floor-priced mint and burn actions.

Those primitives make future derivatives easier to account for. Perpetual futures still require a complete collateral, mark, funding, and liquidation system, while current-floor calls require a separate option-issuance and exercise design.