What is a perp DEX?

A perpetual future, or perp, is a contract that tracks the price of an underlying asset. On N1, a perp gives directional exposure to an underlying index and has no expiry date.

You never buy or receive the asset itself. You hold a position: long if you gain when the price rises, short if you gain when it falls.

A buy adds to a long position or reduces a short one. A sell does the opposite. If you sell more than your long, the rest opens a short.

Positions are margined and settled in the market's quote token. On N1 that is USDC, and risk is counted in US dollars.

A DEX, or decentralized exchange, runs its trading on a blockchain rather than on one company's private servers. The rules that match orders, hold collateral and settle trades are part of the network.

On N1, the order book, the request-for-quote system and the margin system are native modules of the network layer, secured by validators. They are not separate apps built on top.

A perp DEX is two things together: a perpetual futures market, and an exchange whose matching and settlement happen onchain.

Every long has a short on the other side. How you meet that other side depends on the market's execution mode. On N1, each market uses one of two.

• Order book (CLOB). Buy and sell orders rest on a public book. An incoming order matches the best price first, and orders at the same price fill in the order they arrived.
• Request for quote (RFQ). You ask for a price for a set size. Designated market makers answer with firm quotes, and the first valid one fills.

Either way, the trade updates your position, profit and loss, funding and fees in the same way.

Illustrative numbers, not live prices.

The position is worth twice your collateral, so a 10% price move changes your account by 20%. That is what leverage does, in both directions. The maximum leverage caps how large a position your collateral can open. It is a limit, not a target.

Holding a perp involves three more mechanisms.

• Margin. Your collateral must cover a share of your positions. On N1, one account's collateral backs all its positions. See cross vs isolated margin.
• Funding. A perp never expires, so it needs another way to stay near the index price. Funding is a regular payment between longs and shorts that does this. See funding rates explained.
• Liquidation. If losses shrink your margin below the maintenance level, the position can be reduced or closed. See liquidations in the N1 docs.

A dated future has an expiry date. On that date the contract settles, so its price converges to the underlying price as expiry nears. To hold the position longer, you close it and open the next contract, which is called rolling.

A perpetual future has no expiry, so nothing pulls its price to the underlying on a set day. Funding does that job instead: longs and shorts pay each other at regular intervals, based on the gap between the perp price and the index.

Dated futures trade mainly on regulated exchanges such as CME. Perps are the most traded crypto derivative, on centralized exchanges and on perp DEXs such as N1.

A perp DEX lets you go long or short on a price with collateral, without holding the asset. The cost of a position is more than its fee: the fill price, funding while you hold it and the cost of closing all count. The all-in cost of a trade shows how to add them up.

Each N1 market page lists the mark price, index price, projected funding rate and maximum leverage. Order-book markets with enough depth also show the cost to trade $10k and $100k against the mid price.

Do I own the asset when I trade a perp?

No. A perp is a contract on the price of an underlying index. You gain or lose with the price, but you never receive or deliver the asset.

Does a perpetual future expire?

No. A perp has no expiry date. It stays open until you close it or it is liquidated. Funding payments keep its price close to the index instead.

How is a perp DEX different from a centralized exchange?

On a perp DEX, matching, collateral and settlement run on a blockchain rather than on one company's servers. On N1 they are native modules of the network, secured by validators.

What collateral does N1 use?

USDC is the quote and settlement asset on N1. Other positive token balances can also count as collateral, with weights that reflect their volatility and liquidity.

• Perpetual Markets
• Execution Modes
• Introduction to N1
• Margining overview

• Funding rates explained
• Cross margin vs isolated margin
• The all-in cost of a trade