What are Powers
Power Perpetuals are a derivative form of perpetual futures that provide global option-like exposure. Powers are indexed to some power of an underlying asset’s index price.
The funding rate, instead of simply being mark — index now becomes mark  —  index ^ P where P is some power. In the case of SOL² (aka SQUOL), P = 2 and the underlying is SOL squared. The easiest way to understand it is if the price of SOL 3x’s, then the price of SQUOL 9x’s.

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 (²) would be worth 10,000$ (if Sol is at 100$), square root Solana (¹/2) would be 10$, and so forth. This property is enforced by changing the typical perpetual futures funding rate to mark — 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