2026-07-25T12:07:57Z https://drops.dagstuhl.de/oai

oai:drops-oai.dagstuhl.de:24753 2026-01-21T09:56:32Z ddc:004 open_access

PvpAMM: A Perpetual Market for Unbalanced Long-Short Positions Shang, Zhenhang Zhao, Zhenyu Chen, Kani Perpetuals Decentralized Finance Auto Market Making Blockchain Perpetual futures - swap contracts without expiration dates - are the most widely traded derivatives in cryptocurrency markets. Traditional perpetual trading relies on order books, which require substantial bilateral liquidity and face challenges in high-volatility environments. In this paper, we introduce pvpAMM, a peer-to-peer perpetual trading protocol based on automated market maker (AMM) principles. The protocol enables efficient settlement of long-short mismatched markets and drives positions toward equilibrium: when the minority leveraged side wins, their returns are amplified compared to conventional perpetual contracts, while the opposite occurs when the majority side prevails. We also propose arbitrage mechanisms to maintain economic equilibrium within the pvpAMM system. By incorporating liquidity providers (LPs), the protocol aligns more closely with traditional order book trading. Numerical experiments validate our theoretical findings. Schloss Dagstuhl – Leibniz-Zentrum für Informatik Zhenhang Shang and Zhenyu Zhao and Kani Chen 2025 Is Part Of LIPIcs, Volume 354, 7th Conference on Advances in Financial Technologies (AFT 2025) InProceedings Text doc-type:ResearchArticle publishedVersion application/pdf doi:10.4230/LIPIcs.AFT.2025.34 urn:nbn:de:0030-drops-247534 https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2025.34 eng https://creativecommons.org/licenses/by/4.0/legalcode