Use PERP to provide max(op2, op4) to Perp v1 users

To be clear, Option 2 users would get everything that they have been promised by the already concluded vote.

This proposal is about an additional reimbursement, to provide some extra reimbursement to users who would have received more in Option 4.

This proposal would only cost $2.5MM PERP.

In the words of Yenwen, the CEO of Perpetual Protocol:

Yes Option 4 is how the AMM supposes to work. The big account takes more hits because they have to take the slippage.
Option 1, 2, 3 suggests the liquidity is infinite, which is not correct on a AMM.

Opt 4 is a mechanism that closes the position from small to large 1% at a time. 0x000000ea89990a17ec07a35ac2bbb02214c50152 has more balanced portfolio so they have less slippage. Opt 4 didn’t exclude any wallets but just a mechanism that closing everyone’s position.

Sources of messages from Discord: Source 1 , Source 2

In Option 2, which has won the recent vote, about 30 mid size users take enormous losses. I can’t speak for everyone, but in my case, the losses are painful, and I have lost sleep every night for the last week. It may take me 2 years to recover my losses.

I was farming a ~7% expected yield, using about 0.9x leverage, and my position hadn’t been touched in months. I did not think of an unleveraged position on Perp v1 as something especially risky, though obviously I was wrong. I accept my part of the responsibility in taking this risk.

We could debate risk management. I am not here today to place blame on anyone for the failure. I only wish to propose that we Perp Protocol does what is both morally right, and what is also best for Perpetual Protocol in the long run.

So far Perpetual Protocol has had a very good record, earning the trust of its vibrant community. I think that this will change if there is a black mark of dozens of DeFi power users who have lost life-savings sized amounts of money to Perp, especially at the hands of a vote that included the option to return 50% of their funds.

This isn’t just about whether or not Perpetual Protocol is about v1 anymore, it is about:

  • How the Perp team treats their users. Now and forever. If we believe the Opt 2 outcome alone is fair, will others in this space share your beliefs and join Perpetual Protocol?
  • There are now 30 DeFi Power users who will shape part of Perp’s future by spreading the pain of their emotional and highly negative memory to other power users in the space.
  • Doing morally what is right.

I propose to add additional reimbursement to Perp v1 victims on top of Option 2, to also provide the Option 4 results to anyone who received less in Option 4.

In other words, make payouts MAX(Option 2, Option 4).

The cost to provide additional reimbursement to the victims of Perp v1 failure would only be about $2.5MM in PERP.

Relative to the ~$90MM market cap of PERP at the time of writing this, I think this is a worthwhile PR investment. I also simply think it is the morally right thing to do.

It is so low cost because of the reasons already outlined by our CEO, Yenwen, who has already provided some level of endorsement of the Option 4 vAMM simulation, and so is defensable to investors and future Perp users.

Thank you for your consideration.


Strongly in support of this. I believe that’s the only way for Perpetual to salvage their reputation. To the Perp team: would you consider this?


How is the $2.5MM PERP. calculated?

I support and believe that the team will not abandon those who have lost 90%+ of their funds.


I fully support this. It will change people’s life and save Perpetual’s reputation. It sends a message to V2 users that the team will treat all the users fairly. I believe Perpetual Protocol will see the bigger picture and approve this proposal.


Used perp exchange almost from the beginning and was one of the biggest position holders.
Was a referral and attracted people to the exchange.
Did not break any rules and did not abusive system.

In the end I lost the most. I hope the team will not leave it like that.


Any compensation will be paid by perp holders. Large users weren’t compensated in full and it’s fair. The main reason they used the deprecated platform was most likely to earn funding ie to deplete insurance fund. They took a risk to get this very high funding (some instruments were paying 2% a day). Covering this risk by perp holders would be unfair.

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I’m not asking for the full compensation here. The funding rate (by the way it’s capped, so not 2%/day) is to incentivize users to put in funds to stabilize the platform, so we contributed to the stability of the platform similar to the liquidity providers. The risk we took is the vAMM which we already got heavily penalized by the large price slippage. To be further robbed off the remaining free collateral to feed the supposedly liquidated accounts by some centralized rule outside of the normal vAMM protocol is the part that’s unfair, unethical and immoral. Furthermore, we are groups of small users who banded together, why should we be treated differently. Compensating the victims of the difference in op4 and op2 in any form (i.e. locked token paid out over a period of time) is the very least the platform should do if they want to do the right thing and save their reputation.


I strongly recommend the team to consider this proposal. The large position holders suffer massive loss from this unexpected incident for doing nothing wrong and they should not be excluded from compensation. The cost of doing this is relatively small compared to the Perpetual reputation and real life legal outcomes.


Although I will be fully refunded since option 2 won, I think the large position holders deserve additional compensation. People are losing six figure fund they shouldn’t have lost. From a moral perspective, I would rather give up my 20% reimbursement to protect those victims of v1 failure.


I’m sorry if I sound a bit harsh but let me be straightforward.

Tell me please how were you planning to offload your positions the moment IF is off? Didn’t you understand It would bring chaos and you would most likely be unable to exit at fair price ? Didn’t you see that IF was running low already because of high funding paid on your positions? Or your plan was to get as much as possible of IF and when party is over ask for compensation from perp holders? This was clear game and if you tell me you didn’t know what you were betting on with 6 figures I would say it’s strange.

We did not leave because of the announcements by the Perp officials to use their own fund and the partnership with 3rd party arbitrage to bring v1 back to normalcy, as well as their constant reassurance that they will keep v1 running. Perp officials also said that they will pull the emergency break before the user fund is at risk. We had faith with the official, we hoped v1 would recover. We know the risk of exiting at an unfair price. However, we completely did not expect that our free collateral are also subjected to such robbery, resulting in a such complete loss of fund. Op4 is the most fair scenario consistent with what the official says about the worst case. I would’ve never imagined the Perp team would decide to do the unthinkable in robbing the remaining of my money to cover for their downfall and maintain their PR!? You’re not only harsh, but heartless as well, you probably earned back all your money in op2, and still spend your time here to prevent us from getting the compensation we deserve?


I would give up my 20% too. It doesn’t feel right to take money from other users.


I’m in strong support of this. I wouldn’t want to trade on a platform that’s plagued by this kind of air. Perp should compensate the victims and start to rebuild trust and confidence with the users.


I was one of those who bought ETH when there was an unpeg. I believed with all my heart that a platform that had been in operation for so long would stabilize the price sooner or later, and I would help it do so.
Who knew I would be punished for my loyalty to the exchange.
Hope team refund my money (i lost a LOT because of opt2).


Free collateral isn’t the funds not utilized in total collateral. It’s covering your position as well. Its just part of collateral you can take out to get a max possible leverage of 10x.
I didn’t see team was saying they would upload their funds to IF in case of IF depletion.
If Alameda/Winter (another 800k) are taken out of compensation list I would agree pro rata sharing of additional USD 1mn in form of tokens among big accounts.

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When we have 0.5X leverage long position, it means at least half of it is safe even if the price drops to 0. We didn’t take it out because we’ve never thought that those part are still subjected to robbery. What happened in op2 is that the 2X leverage users still got their money back. Most of them already took out the collateral to somewhere else. During the price slippage, they should’ve gotten liquidated because the collateral they have on this platform cannot cover the loss incurred by the price slippage. In op2, the 2X got covered while the 0.5X got emptied, it’s the reverse of what it should be under normal vAMM. Op4 is the most fair way that simulates the vAMM unwinding, but it got outvoted by large institution like Alameda because they still got money back even they are doing 2X positions. This is just wrong, and the resulted victims of this should get compensated. I personally know some smaller 2X users are thinking they are lucky this time to get their money back, as they have already moved their money away ahead of time. So show some sympathy to users who were wrongly robbed here because you know deep down I’m speaking the truth. Our loss is huge, painful and devastated, it will probably take decades of hard work and savings to earn back that much loss, it’s truly life changing.


Not even sure it was possible to open position with leverage less than 1x on perp.
Leverage could go down below 1 when you have unrealized profit on your position but most exchanges don’t let you take upnl out unless you close your position.

I see your point. I think it will do more effect if you post your address with position details so team/voters could see how much you were affected.

Alameda’s addresses (compiled elsewhere) already get back 0 under op4, no concern in that sense. There’s a rationale for excluding Winter too, I think: the proposal presented as a compensation for “6-figure retail investors” that get punished under op2. Nevertheless, the difference is $3.8M of compensation for not excluding vs. $3M for excluding them, which I don’t think it’s any qualitatively different.

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More generally, the presentation of that proposal puts a strong focus on the ethical dimension. There is merit in doing it that way, because a resolution that’s unethical would be overall damaging to the valuation of PERP tokens.

That said, it’s imporant to keep in mind that that’s not a legal case to be judged; in the end, it’s a vote by PERP stakeholders, which will vote according to their own self-interest. This nuance is relevant, because details about who to include/exclude, or make the distribution liquid or vested, can affect the chances of approving the proposal.

This is a chart of v1 claim sizes as extrapolated from op1 payouts from the official simulation.


The blue share is the sum of the 7 top accounts. The orange share is the next 22 accounts; the smaller 4 of these are already made whole with op2. In the past vote PERP holders have expressed a willingness to compensate retail investors first. Fairness considerations aside, the exclusion of >$1M accounts may increase the chances of the proposal.