# Perennial Isolated Margin

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Perennial is a DeFi-native derivatives primitive that allows for the creation of two-sided markets that trade exposure to an underlying price feed in a capital efficient manner.

#### **How does it work?** <a href="#how-does-it-work" id="how-does-it-work"></a>

Perennial acts as a peer-to-pool derivatives AMM that perpetually offers to take the other side of any Taker’s position directly at the oracle price, in exchange for funding & interest rates based on market skew & utilization.

**Takers (Traders)** deposit collateral to get leveraged exposure to different price feeds (long, short, and exotic payoffs). A Taker's exposure within a market is matched against positions in the opposite direction. Where a shortfall between Takers exists in a market, **Makers (Liquidity Providers)** provided capital earns fees for filling the shortfall in the market. Makers take on exposure relative to the amount required to fill the exposure mismatch between takers.

On a continuous, on-going basis, takers & makers settle up; the losing side of the trade pays the winning side.

#### Why Perennial? <a href="#why-perennial" id="why-perennial"></a>

Perennial is minimalist at its core, designed to be a low-level, unopinionated primitive that lays the basic infrastructure and leaves the rest up to market creators and participants to define/optimize.

Some things that make Perennial stand out:

* **Cash-settled** — trades settled in $USD, not crypto, in line the most popular crypto derivatives
* **Low fees** — a hyperefficient protocol (in terms of mechanism design & capital efficiency) that minimizes fees for takers & makers
* **Customizable LP experience (both simple & pro)** — Makers can LP with significant leverage (up to 50x) and can fully customize their risk exposure & hedging strategy (or lack thereof); Retail LPs can utilize vaults built on top that abstract complexity. Perennial makes very few assumptions about LPs at the protocol level, giving LPs full control.
* **Designed for the needs of Developers** — not just another trading protocol; Perennial is built to be a composable primitive (low fee, fully-on chain, easy to integrate)
* **Permissionless** — Permissionless market creation, integration, and composability.


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