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What are Powers

The funding rate, instead of simply being

`markโโโindex`

now becomes `markโ โโ index ^ P`

where `P`

is some power. In the case of SOLยฒ (aka SQUOL), `P = 2`

and the underlying is SOL squared. The easiest way to understand it is if the price of SOL 3xโs, then the price of SQUOL 9xโs.What are Powers?

Power Perpetuals are a novel financial derivative type first outlined here by Dave White, Dan Robinson, and the Opyn team, that offer uniquely different payout structures to traders.

Imagine a regular perpetual future but raised to a power. Squared Solana (ยฒ) would be worth 10,000$ (if Sol is at 100$), square root Solana (ยน/2) would be 10$, and so forth. This property is enforced by changing the typical perpetual futures funding rate to

`mark โ index^power`

.We say that Powers provide option-like exposure because of the convexity of the payout. When prices move in in your favour, you earn a lot more than you would lose if prices move against you.

Why Trade Powers?

**Hedge**impermanent loss from LP positions**Hedge**any vanilla option with the same underlying asset**Construct**automated vault strategies

Further Reading

Last modified 2mo ago

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