LP-0043Finalperpsfuturesleveragefundingliquidation

LP-043: Perpetual Futures

Abstract

The Lux perpetual futures protocol enables leveraged trading of any oracle-priced asset without expiry dates. Traders open long or short positions with up to 50x leverage, collateralized by USDC. A funding rate mechanism keeps the perpetual price aligned with the oracle spot price. Liquidity is provided by a shared vault (the LPX pool) that acts as counterparty to all trades.

Specification

Position Model


Position {
    owner           address
    market          bytes32     // e.g., keccak256("LUX/USD")
    isLong          bool
    size            uint256     // position size in USD
    collateral      uint256     // USDC collateral
    entryPrice      uint256     // oracle price at open
    entryFunding    int256      // cumulative funding at open
}

Leverage = size / collateral. Maximum 50x.

LPX Vault

The LPX vault provides liquidity for all markets:

LPs deposit USDC into the vault, receiving LPX tokens
The vault is the counterparty to every trade: trader PnL = -vault PnL
Vault value = deposited USDC + unrealized PnL from all open positions
LPX token price = vault value / LPX total supply

Funding Rate

Funding rate aligns perp price with oracle price:


fundingRate = (perpPrice - oraclePrice) / oraclePrice * fundingFactor

Payment frequency: every 8 hours
Direction: longs pay shorts when perp > oracle; shorts pay longs when perp < oracle
Factor: fundingFactor = 0.01 (1% per 8h at full divergence)

Funding is accrued continuously and settled on position modification.

Liquidation

Positions are liquidated when margin ratio falls below maintenance margin:


marginRatio = (collateral + unrealizedPnL - pendingFunding) / size
maintenanceMargin = 0.5% (50x) to 1% (25x), scaled by leverage

Liquidators receive a 0.5% keeper fee. Remaining collateral (if any) returns to the trader.

Fee Structure

| Fee | Rate | Recipient |

|---|---|---|

| Open/close fee | 0.08% of size | 70% LPX vault, 30% treasury |

| Borrowing fee | variable (utilization-based) | LPX vault |

| Liquidation fee | 0.50% of size | Liquidator |

Markets

Markets are added by governance. Each market specifies:

Oracle feed ID (LP-038 K-chain feed)
Maximum leverage (up to 50x)
Maximum open interest (per side)
Funding factor

Security Considerations

1. Oracle dependency: all PnL calculations use K-chain oracle prices (LP-038). Oracle manipulation directly impacts positions.

2. Vault risk: in extreme one-directional markets, the LPX vault can lose capital. Maximum open interest limits bound this risk.

3. Cascading liquidations: rapid price moves can trigger liquidation cascades. A liquidation buffer (auto-deleverage) reduces systemic risk.

Reference

| Resource | Location |

|---|---|

| Perpetuals contracts | github.com/luxfi/standard/contracts/perps/ |

| LPX vault | LPXVault.sol |

| Oracle integration | LP-038 |

Copyright

Licensed under the MIT License.