Perpetual futures contracts are leveraged trading instruments that allow traders to speculate on asset prices without an expiration date. Unlike traditional futures, perpetuals remain open indefinitely and are cash-settled, eliminating the need for physical delivery of the underlying asset.
On Helix, perpetual contracts are margined with stablecoins (e.g., USDT), making them more accessible and reducing the need to hold or store the underlying asset. Perpetuals also tend to be more liquid than traditional futures, minimizing slippage during trades.
To maintain alignment with the underlying asset's spot price, perpetuals rely on a funding mechanism. Funding payments are exchanged periodically between long and short positions based on the funding rate, which adjusts for price deviations between the perpetual contract and the underlying asset. This mechanism ensures the price remains close to the spot price, preventing significant overpricing or underpricing.
Realized vs. Unrealized Profit and Loss (PNL)
Realized PNL: Profit or loss locked in when a position is closed, accounting for entry/exit prices and fees (e.g., trading fees, funding payments).
Unrealized PNL: Potential profit or loss on an open position based on the current market price, fluctuating with the mark price.
Mark Price
The fair value price used to calculate unrealized PnL and liquidation events, preventing manipulation from temporary price changes. Helix uses decentralized oracles like Pyth and Stork for accurate mark price data.
Margin Requirements
Initial Margin: Margin required to open a position, based on position size and leverage.
Maintenance Margin: The minimum margin needed to keep a position open. Falling below this threshold triggers liquidation, automatically closing the position to prevent further losses.
Liquidation
Triggered when the margin balance drops below the maintenance margin. To avoid liquidation, traders can add more margin, reduce their position size, or monitor market conditions closely.
Funding Payments
Periodic payments exchanged between long and short positions to align the perpetual price with the spot price. On Helix, funding occurs hourly.
Positive funding rates: Longs pay shorts.
Negative funding rates: Shorts pay longs.
This mechanism incentivizes traders to bring the perpetual price back in line with the underlying market.
Leverage and Risk Management
Higher leverage reduces the buffer between the initial and maintenance margin, increasing the risk of liquidation. Traders should calculate liquidation prices and adjust their strategies to manage risks effectively.
Helix perpetual futures go beyond standard trading applications, enabling innovative use cases like Election Perpetuals and Index Perpetuals.
Election Perpetuals
Election perpetuals allow traders to speculate on election outcomes with leverage, offering exposure to markets like Polymarket's Presidential Election Winner 2024. These contracts are perpetual futures tied to an index price rather than traditional crypto assets.
Key Features
Leverage: Trade with up to 3x leverage.
Funding Mechanism: Funding payments ensure the contract price aligns with the Polymarket index.
Mark Price: Uses a proprietary oracle from Stork, applying a 6-hour time-weighted average price (TWAP) to reduce volatility.
Example For the 2024ELECTION PERP, the mark price tracks Polymarket's midpoint for "Donald J. Trump Wins." If the Polymarket market resolves to "yes," the price settles to $1; otherwise, it settles to $0.
Market Settlement While perpetual contracts have no expiration date, trading activity decreases as elections conclude. Once the Polymarket result is final, a governance proposal can settle the market, liquidating any open positions at the final mark price ($0 or $1).
Index perpetuals are derivatives that track the price of an index instead of a single asset. These contracts are perpetual futures tied to indices, such as baskets of cryptocurrencies or on-chain metrics like the total supply of a product. For example, the BUIDL/USDT Index Perp tracks the net asset value (NAV) of BlackRock's BUIDL fund.
Key Features
Leverage: Trade with up to 5x leverage.
Funding Mechanism: Funding payments align the contract price with the index.
Mark Price: Uses a proprietary oracle from Stork, which applies a 1-hour TWAP to smooth price fluctuations.
Example For the BUIDL/USDT Index Perp, the mark price reflects the total supply of the BUIDL fund based on its smart contract on Ethereum. The NAV is scaled down for readability (e.g., 500 million tokens equates to a price of 5000).
Index perps provide flexible and innovative trading opportunities, allowing traders to speculate on broader market movements or specific on-chain metrics without holding the underlying assets.
Overview
The Helix "AI Index" is a cryptocurrency index designed to provide investors with diversified exposure to the most promising AI blockchain projects and AI Equities. The index comprises 50% of 10 selected AI blockchain tokens and 50% of 6 AI Equities.
Components: 10 AI tokens, including Near (NEAR), Internet Computer (ICP), Bittensor (TAO), Render (RENDER), Virtuals Protocol (VIRTUALS), Artificial Superintelligence Alliance (FET), Injective (INJ), Akash Network (AKT), Ai16Z (Ai16z) and Grass (GRASS)
Weighting Methodology: Market capitalization-weighted.
Rebalancing Frequency: Monthly.
Components: 6 AI stocks, including Nvidia (NVDA), Taiwan Semiconductor Manufacturing Company Ltd (TSM), Palantir (PLTR), Arista Networks (ANIT), Super Micro Computer Inc (SMCI), and SenseTime (SNTMF)
Weighting Methodology: Market capitalization-weighted.
Rebalancing Frequency: Monthly.
Market Cap Calculation: For each token, its market capitalization is calculated by multiplying the token's price by its circulating supply. Tokens represent 50% of the index. For each stock, the market capitalization is taken from Bloomberg Terminal. Equities represent 50% of the index.
Initial Weights: Each token’s weight is determined by dividing its market cap by the total token market cap. Likewise, each equity’s weight is determined by dividing its market cap by the total equity market cap.
Index Value: The index is priced by aggregating the weighted prices of each component token and equity.
Formula: First we divide the market capitalization for each asset by the sum of the market capitalization in each asset sector, equities and crypto. This gives us the asset-specific weight for for the index. Then we sum the market capitalization for all equity assets and all crypto assets. Next, we multiple each asset-specific weight by the sum of the market capitalization of all assets to get the normalized market capitalizations for each asset. This normalizes the assets so that 50% of the index represents AI Equities and 50% of the index represents AI Tokens. Lastly, we add up the normalized market capitalizations and divide by 1,000,000,000 (10^9) to get an index price for the asset.
Here are the steps in formula form:
Calculate the total market capitalization for each sector:
Calculate asset-specific weights:
Adjust the weights to a scaled value of 50% crypto and 50% equity:
Calculate normalized market capitalizations:
where
Calculate the index price:
The index price is now:
Benchmarking: Investors can use the "AI Index" as a benchmark to measure the performance of their portfolios.
ETFs and Derivatives: The index can serve as the basis for financial products like ETFs or derivatives that track its performance.
Cap on Dominance: The representative caps prevent any single token or equity from dominating the index, reducing concentration risk.
Diversification: By including 10 tokens, the index mitigates the impact of poor performance in any one project.
Real-Time Tracking: The index value is updated in real-time based on the latest prices of the component tokens.
Historical Data: Historical index values are available to analyze trends and performance over time
where represents the total market cap of the equity companies in the said basket, and represents the total market cap of the crypto companies in the basket. represents the element with index in the real valued vector and similarly represents the element with index in the real valued vector
where and represents each element of the real valued vectors and
where and where and represent the total number of crypto and equity companies, respectively, and is the adjusted weight metric.
Now let us introduce another variable which represents the entire basket of equity and crypto whose dimensions are now a direct sum of as
Based on the new we calculate the total normalized market cap:
where the numerator is a vector summation, and the .
Stocks
NVDIA
0.363449688376
TSM
0.096836076142
PLTR
0.021002110020
Arista Networks
0.015632109434
Super Micro Computer Inc
0.002100211002
SenseTime
0.000979805025
Crypto
Near (NEAR)
0.111904058106
Internet Computer (ICP)
0.086567290233
Render (RENDER)
0.065453317005
Bittensor (TAO)
0.073898906296
Virtuals Protocol (VIRTUALS)
0.028503863857
Artificial Superintelligence Alliance (ASI)
0.059119125037
Injective (INJ)
0.038005151809
Ai16z
0.014568641527
Akash Network (AKT),
0.012900637642
Grass (GRASS)
0.009079008488