Frequently Asked Questions
How is a perpetual futures different from a traditional futures contract?
A traditional futures contract has a fixed expiry date — it settles at expiry at the spot price. A perpetual futures contract never expires. To keep the perp price anchored to spot, the funding rate mechanism charges longs when perps trade above spot (discouraging longs) and credits longs when perps trade below spot (encouraging longs). Traders can hold perpetual positions indefinitely as long as they have sufficient margin and the accumulated funding payments do not deplete their balance.
What makes GMX different from other perps protocols?
GMX uses a pooled liquidity (GLP) model — traders trade against the GLP vault, which is funded by liquidity providers who receive fees in exchange for bearing the counterparty risk to traders. Most trades are against the vault at oracle price with zero price impact (for smaller trades). Advantages: no order book, better prices for small trades, simple LP model. Disadvantages: LPs bear directional risk (profitable traders reduce LP value), limited liquidity for very large trades.
What is the insurance fund in perpetuals trading?
When a liquidation results in a deficit (the liquidated position's remaining collateral is less than the debt), the insurance fund covers the deficit. The fund is built from: a portion of trading fees, a portion of profitable liquidations (when the position is liquidated and collateral exceeds the debt). If the insurance fund is depleted, auto-deleveraging (ADL) kicks in — the positions of the most profitable traders on the opposite side are automatically reduced to cover the deficit.
How is the perpetual futures funding rate calculated and settled?
The funding rate consists of two components: the premium index (measuring the spread between the perp mark price and the underlying spot index) and an interest rate component. It is sampled continuously using a time-weighted average price (TWAP) over an 8-hour or 1-hour interval. Settlement occurs automatically by debiting or crediting the position's unrealized margin balance directly in memory.
How does cross-margin vs isolated margin function across perpetual positions?
In isolated margin, risk is strictly ring-fenced to individual positions with dedicated collateral. In cross-margin, all available account equity is pooled to satisfy maintenance margin requirements across multiple positions. Our risk engine continuously computes portfolio-wide net margin, allowing unrealized gains in one contract (e.g., long ETH) to offset drawdowns in another (e.g., long BTC).
What matching engine throughput and latency are delivered for perpetual contracts?
Our high-performance Go/Rust perpetuals matching engine processes over 150,000 orders per second with sub-millisecond execution times. The order book maintains lock-free ring buffers for order placement, cancel, and amendment, ensuring deterministic execution during extreme volatility events.
How do decentralized perpetual protocols (vAMM vs order book vs GLP vault) compare?
Virtual AMMs (vAMMs) enable synthetic leverage without liquidity pools but rely heavily on funding rates for arbitrage alignment. GLP-style vaults offer zero-slippage oracle trading for retail sizes but expose liquidity providers to directional skew. High-performance off-chain CLOBs with on-chain settlement (e.g., dYdX/Aevo model) offer institutional order book depth and low latency while maintaining non-custodial asset settlement.
How does the liquidation engine prevent cascading bankruptcies and socialized loss?
The system triggers partial liquidation at predefined maintenance margin tiers before an account reaches negative equity. If an account drops below bankruptcy price, the exchange insurance fund absorbs the residual deficit. Auto-Deleveraging (ADL) is reserved strictly as a fail-safe mechanism, ranking profitable counterparty positions by leverage and profit ratio.
Can institutional traders execute algorithmic strategies via WebSocket and FIX protocol?
Yes. The perpetuals platform exposes low-latency WebSocket streams for real-time L2/L3 order book depth, trades, and position updates, alongside dedicated REST and FIX 4.4/5.0 gateways. Institutional market makers benefit from mass-quote management, cancel-on-disconnect protection, and co-location options.
How do you handle multi-collateral and portfolio margining for perpetual futures?
The risk engine supports multi-currency collateral (e.g., USDT, USDC, BTC, ETH) with dynamic haircut discounts applied based on asset volatility. Portfolio margining nets risk across correlated contracts, calculating maximum potential loss across stress-test price scenarios to grant capital-efficient margin discounts to hedged traders.
