How vPerps Work
Synthetic perpetual contracts that provide long-only exposure to assets through a virtual AMM with automatic funding rate alignment
What Are vPerps?
Virtual perpetuals (vPerps) are synthetic tokens that track the price of assets without requiring you to hold the underlying asset
Think of it like this...
Instead of buying actual CARBONE tokens and dealing with custody, transfers, and wallet management, you deposit USDC and receive vCARBONE tokens that track CARBONE's price. If CARBONE goes up 10%, your vCARBONE is worth 10% more. If it drops, your value drops too. It's like having exposure to the asset without the hassle of holding it.
Synthetic Exposure
Like owning stock without buying it—vPerps give you price exposure to assets without holding the actual tokens.
Fully Collateralized
Your position is backed 1:1 by USDC collateral. No liquidation risk, no margin calls, no surprises.
Long-Only Positions
vPerps represent long positions (betting on price increases). Simple, straightforward, and easy to understand.
Composable Tokens
vPerps are SPL tokens you truly own. Trade them on DEXs, use them in other DeFi protocols, or hold them in your wallet.
Key Difference
- •Buy and hold actual tokens
- •Deal with custody and security
- •Limited composability
- •May have transfer restrictions
- ✓Get price exposure via synthetic tokens
- ✓Collateral safely locked in protocol
- ✓Fully composable SPL tokens
- ✓Trade freely on any DEX
The Virtual AMM
Think of the virtual AMM as a pricing calculator. It uses the constant product formula (x × y = k) to determine prices—without actually trading anything.
How It Works
The vAMM is for pricing only, not for trading. All actual trading happens on external markets like Meteora.
Try It Yourself
The Minting Process
Here's exactly what happens when you mint vPerps, step by step
Deposit Collateral
You deposit USDC as collateral into the protocol
vAMM Calculates
The virtual AMM uses x×y=k to determine the amount of vPerps to mint
Receive vPerps
You receive synthetic vPerp tokens representing your long position
Position Tracked
Your position is recorded on-chain with your collateral and vPerp amount
Complete Example
The calculation: 100 USDC ÷ $1.05 per vPerp = 95.24 vPerps (minus small price impact from the vAMM curve)
Funding Rate Mechanism
Funding rates keep the vAMM price aligned with the external market price. When prices diverge, funding is paid or received to encourage arbitrage.
When vAMM Price > Market Price
Longs pay funding (negative rate). This incentivizes users to burn vPerps or arbitrage, bringing the vAMM price down.
When vAMM Price < Market Price
Longs receive funding (positive rate). This incentivizes users to mint vPerps or arbitrage, bringing the vAMM price up.
The Formula
Where k is the funding coefficient (typically 0.01 or 1%)
Interactive Simulator
Trading on Meteora DLMM
Once you have vPerps, you can trade them on Meteora's Dynamic Liquidity Market Maker (DLMM) or provide liquidity to earn fees
Trading vPerps
vPerps are standard SPL tokens that can be traded on any Solana DEX. The primary market is Meteora's DLMM, which provides efficient pricing and deep liquidity.
Provide Liquidity
Become a liquidity provider (LP) on Meteora to earn trading fees from users who swap vPerps. LPs are essential to maintaining market efficiency.
- ✓Earn trading fees from every swap
- ✓Concentrated liquidity for capital efficiency
- ✓Dynamic fee tiers based on volatility
- ✓Provide single-sided or balanced liquidity
Providing liquidity carries impermanent loss risk if the price of vPerps changes significantly relative to USDC. Only provide liquidity if you understand these risks.
Why Meteora DLMM?
Benefits & Risks
Understanding both the advantages and potential downsides of vPerps
Benefits
Long-Only Exposure
Simple directional bets on price increases without complexity of leverage or shorts
No Counterparty Risk
Your collateral is locked in a smart contract, not held by a centralized exchange
Transparent Pricing
vAMM pricing is fully transparent and deterministic based on the x×y=k formula
Composable Tokens
Use your vPerps in other DeFi protocols, trade on any DEX, or hold in your wallet
No Liquidation
Fully collateralized positions mean you can never lose more than you deposit
Funding Opportunities
Earn funding payments when the market price is above the vAMM price
Risks
Funding Rate Costs
mediumYou pay funding when vAMM price exceeds market price. Costs accumulate over time.
Price Impact
lowLarge mints/burns can cause significant price impact due to the AMM curve.
Smart Contract Risk
mediumAs with all DeFi, there is inherent risk of bugs or exploits in the protocol code.
Market Risk
highIf the underlying asset price drops, your position loses value (you are long only).
Risk Management Tips
For New Users
- •Start with small positions to understand mechanics
- •Monitor funding rates regularly
- •Understand price impact before large trades
For Active Traders
- •Watch for arbitrage opportunities between vAMM and DLMM
- •Close positions when funding becomes too expensive
- •Consider providing liquidity to earn fees
Disclaimer: Always do your own research and only invest what you can afford to lose. DeFi protocols carry inherent risks, and past performance does not guarantee future results.
Real-World Example
Follow Alice's journey as she mints vPerps, benefits from funding rates, and closes her position with a profit
Alice Deposits Collateral
Alice deposits 100 USDC into the protocol to mint vPerps
Market Price Moves Up
The external market (Meteora) price increases, creating divergence
Funding Rate Applied
Since vAMM < Market, Alice receives positive funding
Alice Closes Position
Alice burns her vPerps and receives USD back
Final Result
Alice's profit came from two sources: (1) the increase in market price, and (2) positive funding payments while the vAMM price was below market price.
Frequently Asked Questions
Common questions about how vPerps work and what to expect