Perpetual Protocol, a new DeFi derivatives exchange, revealed that the platform had already crossed its $500,000 open interest (OI) cap for decentralized perpetual contracts. The announcement is coming less than 24 hours after the mainnet launch of the service on Wednesday.

Following the achievement, the project has decided to double its OI limit to $1 million as well as the personal position cap for Bitcoin (BTC) and Ether (ETH) trading pairs. The limit was introduced to limit possible losses in the early days of the protocol's launch. The announcement is yet another crypto derivatives milestone attained with BTC Futures OI and Bitcoin options trading volume reaching new heights on Wednesday.

Perpetual Protocol uses a virtual automated market maker (vAMM) to allow perpetual swaps without the need for a centralized counterparty. The system bears some similarities to automated market makers (AMM) like Uniswap.

However, unlike Uniswap, there are no liquidity providers in the Perpetual Protocol setup. Thus, rather than storing tokens on the platform itself, tokens are domiciled in vaults with sufficient collateral to fulfill every trade.

No actual token swap occurs with the vAMM as the market maker architecture only acts as a price engine. Thus, users do not suffer impermanent loss and liquidation is restricted to the individual deposits of the losing party in the perpetual contract trade.

According to the project’s documentation, the platform mitigates speed and trading fee issues by utilizing the xDai chain as a settlement layer. However, Perpetual Protocol says it is possible to deploy the solution on a similar layer-2 (L-2) settlement architecture.

While the platform promises 20x leveraged perpetual swaps on any crypto asset, the initial roll-out only covers BTC and ETH against USD Coin (USDC). Perpetual Protocol secured $1.8 million in a seed funding round led by Three Arrows Capital back in August.