A new DeFi protocol is launching on Core Chain — NLX Protocol — an innovative platform to trade on-chain perpetual futures contracts backed by Bitcoin on Core Chain. But what exactly are perpetual futures, and why do they generate so much buzz in the crypto community? Let’s dive deeper.
Understanding Perpetual Futures Contracts
Perpetual futures contracts, often referred to simply as “perps,” are a type of derivative instrument commonly used for trading cryptocurrencies with leverage. Unlike traditional futures contracts, which have expiration dates, perpetual contracts have no fixed expiry date, allowing traders to hold their positions indefinitely. The common “Long” and “Short” positions refer to perps, and Core Chain now offers this type of trading through NLX Protocol.
The Appeal of Perps in DeFi Trading
Perpetual futures contracts offer several advantages that make them popular among traders in the DeFi space:
Leverage: Perpetual contracts allow traders to amplify their exposure to cryptocurrency assets by trading with leverage. This means that traders can control larger positions with a smaller amount of capital, potentially magnifying their profits (or losses).
Continuous Trading: Since perpetual contracts have no expiry date, traders can hold their positions for as long as they wish, providing flexibility and convenience compared to traditional futures contracts.
Funding Mechanism: Perpetual contracts use a funding mechanism to ensure that the contract price stays in line with the spot price of the underlying asset. This mechanism helps to prevent price discrepancies and maintains stability in the market.
NLX Protocol: Pioneering On-Chain Perps Backed by Bitcoin
NLX Protocol is at the forefront of DeFi innovation with its pioneering approach to perpetual futures trading. By launching on Core Chain, NLX Protocol is poised to revolutionize the way traders engage with leveraged trading while ensuring security, transparency, and stability.
Leveraging Bitcoin as Collateral
One of the key features of NLX Protocol is its use of Bitcoin as collateral for its perpetual contracts. By backing contracts with Bitcoin, NLX Protocol provides users with a reliable and trusted form of collateral, enhancing security and stability in the platform.
Earning Bitcoin with NX Pools
In the NLX Protocol, all markets are collateralized in Bitcoin, allowing participants to take advantage of the volatility of these products while not losing their exposure to Bitcoin.
By providing single-sided liquidity to NX Pools, which are isolated Bitcoin liquidity pools for each market, participants can earn fees from trades and borrowing. Additionally, these pools maintain a close peg to Bitcoin, thanks to funding rate mechanisms. These mechanisms ensure that the pools aren’t overexposed to one side — either short or long — by incentivizing markets to maintain a 50/50 balance of long and short open interest.
NLX Protocol on Core Chain
As NLX Protocol goes live on Core Chain, DeFi traders now have the opportunity to explore the potential of on-chain perpetual futures trading backed by Bitcoin. Whether you’re a seasoned trader looking to expand your portfolio or a newcomer interested in exploring the world of DeFi, NLX Protocol offers a gateway to a more decentralized and innovative trading experience.
Stay tuned for updates and announcements about NLX Protocol, and keep an eye out to your Core Ignition dashboard — a booster for trying out NLX Protocol might show up!
About Core Chain
Core is a Bitcoin-powered blockchain unlocking EMV-Compatible BTCfi beginning with the first ever implementation of Non-Custodial BTC Staking and the world’s first yield bearing BTC ETP. Core is the most Bitcoin-aligned EVM blockchain with ~55% of Bitcoin mining hash power contributing to the network’s security and over 4,800 BTC natively staked in exchange for unlocking Bitcoin utility and rewards. This breakthrough has amassed millions of Core adopters - over 19M unique addresses and 260M transactions since its mainnet launch in January 2023.