Perp Pools Deposits

What are Perp Pools?

Liquidity providers deposit $USD to perp pools on Demex to add liquidity to perp markets, and receive $CLP tokens in return.

$CLP tokens are yield-bearing tokens that signify your proportional share of the provided liquidity. These tokens also continuously accrue yield with every block.

How do $CLP tokens earn yield?

$CLP earns from trading APR, which comprises the following:

  • High Maker Rebates: When a trade is executed using your liquidity, you earn maker rebates, and Demex has one of the highest maker rebates (>5bps for devnet), rewarding you for adding liquidity to the market and promoting order book depth.

  • Funding Rate: As part of the perpetual trading mechanism, funding rates are exchanged between traders. Liquidity providers can also earn a share of these funding fees for their contribution to the pool. Perp pools have a unique funding rate mechanism to rebalance the skew between longs and shorts in order to protect LPs during large market swings.

  • Trader PnL: You will receive a portion of the losses generated by traders who utilize the liquidity in the Perp Pools for their trades.

What happens when I deposit?

When you deposit $USD into the Perp Pools, your funds are automatically used to increase liquidity in the linked perpetual markets following a specific market-making strategy.

Let's illustrate this with an example:

Suppose you deposit $1,000 into a Perp Pool that's linked to BTC-PERP and ETH-PERP. Upon your deposit, a $1,000 bid and a $1,000 ask near the Index price will be added to each of these markets (BTC-PERP and ETH-PERP). Thus, your $1,000 liquidity contribution effectively generates $4,000 in order book liquidity.

The bid and ask prices are kept close to the Index price to provide traders with competitive rates. These prices are frequently updated to match the Index price.

Whenever a trader utilizes the liquidity, that amount is simultaneously deducted from elsewhere in the pool, maintaining the overall liquidity balance.

Click here to find out more about how it works.

How To Deposit to Perp Pools

  1. Locate 'Perp Pools by Fluo' on the page.

  2. When you click 'Go to Vault', you will be directed to the Base Vault.

  3. Decide how much $USD to deposit.

  4. You will receive $CLP corresponding to your deposit.

Now that you have $CLP, you can stake them as well to earn more rewards.

More detailed instructions and images are available on the next page.

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