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  • ⚜️What are Power Derivatives?
  • ⚕️Features of Power Derivatives
    • 💸1. No Long-Short Liquidations
    • 📊2. Amplified Gains and Softened Losses
    • ⏳3. No Strikes or Expirations
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  • Scenario 1: The Price of BTC Increases by 20%
  • Scenario 2: The Price of BTC Decreases by 20%
  1. Features of Power Derivatives

2. Amplified Gains and Softened Losses

Previous1. No Long-Short LiquidationsNext3. No Strikes or Expirations

Last updated 6 months ago

Power perpetuals exhibit positive convexity, meaning favourable price movements yield greater positive returns compared to the absolute negative returns from equally sized unfavourable moves.

For example, let’s compare the risk-return profile of 5x leverage with BTC⁵, a power derivative on Genie DEX:

Refer to the SquaredLabs whitepaper on calculating the return on power derivatives.

Scenario 1: The Price of BTC Increases by 20%

  • 5x Leverage: 100% profit

  • BTC⁵: approx. 148% profit

Scenario 2: The Price of BTC Decreases by 20%

  • 5x Leverage: 100% loss (leading to liquidation)

  • BTC⁵: approx. 67% loss

In conclusion:

  • a 20% increase in the underlying asset price (BTC) results in a 148% return

  • a 20% decrease in the underlying asset price (BTC) results in a 67% loss

Read this article and our whitepaper to understand how amplified gains and softened losses compare to traditional leverage.

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The price of BTC increases by 20%
The price of BTC decreases by 20%