👌Benefits

Cheap Thesis Invalidation

Protected perpetuals is a product that allows traders to take long or short positions without being liquidated from price movements. This means when the market price rises or falls dramatically, traders will not have their positions liquidated by price and neither do they take negative P&L. So should a trader go long, but the market went the other way, their thesis is invalidated cheaply.

An example: Trader opened a position at $1,900 activation price for 8 hours. When the market price declined from $1,831 to $1,771. Instead of taking a 3% loss, the trader lost 8 hours 8 * 0.005 = 0.04%. These losses are negligible compared to the actual losses had a stop loss kicked in.

Activation price refers to the entry price.

If you lose less when you're wrong, you do not need to trade more to make a comeback. Instead, efforts can be made to improve the trader's skill to improve the probability of making successful trades and earn more over time.

Essentially, when traders enter and they make money, that is a good entry. When traders enter and they lose their funding rate, It is a good learning opportunity. This is valuable. Hence this is also seen as a good entry.

Most Accurate Pricing

TaoTrade is pricing options at the money. There is efficiency at the money because they are the closest to the current market price of the underlying asset. Market data is pulled from oracles to ensure that our pricing has consensus with model based pricing.

TaoTrade only offers one activation price therefore our pricing does not have major differing opinions on option smile (skew) arising from variations in implied volatility, risk assessment, and market dynamics based on different strikes and maturities.

No Liquidations

Traders are not liquidated based on price movements. Instead, positions are closed when there is insufficient margin. When a position is open, traders pay for protection on their positions.

Note, hourly funding rates change over time, which may subject your positions to rebalancing, especially with high-margin usage. Therefore, it's crucial to monitor your margin usage and manage your positions to maintain a safer margin usage percentage.

No Counterparty Risk

Traders have no counterparty risk because every position they trade against corresponds to liquidity in the vault. Liquidity providers accept this trade as they are compensated by the trader’s fees.