Perpetual Swap on DefiTuna

Key Characteristics of a Perpetual Swap:

  • No Expiration: Users can hold a position indefinitely without an expiry date.

  • Leverage: Funds are borrowed and instantly swapped to amplify exposure in a specific direction.

  • Funding Rate: A funding mechanism ensures that the price of the perpetual swap stays close to the underlying asset's price.

Some things to consider: Simply borrowing an asset is not enough to short it. Once the asset is borrowed, it must be immediately swapped to allow for repurchase at a later date. A trader realizes profit when the swapped funds are exchanged back into the borrowed asset after a price change.

Example: Imagine I borrow an iPhone worth $1,000. I sell it immediately for cash and wait. Six months later, the iPhone's market price drops to $600. I buy it back and return it, keeping the $400 difference as profit.

If I hadn’t sold the iPhone when I borrowed it, I would still be exposed to its price movements, but I wouldn’t actually be short.

Steps to Enter a Long Position:

  1. Borrow a token.

  2. Immediately swap it into a different token.

  3. Wait for the borrowed token to increase in value.

  4. Swap back into the borrowed token and repay it, profiting from the price difference (between what is returned and the borrowed amount).

Simulating a Long Perpetual Position on DeFiTuna: Now that we understand the basics, let’s simulate this process on DeFiTuna. Assume the current SOL price is 151 USDC per SOL.

Step 1 : Set Leverage and Borrow Ratio

In the following scenario, we've adjusted our Borrow Ratio entirely to USDC, as shown in the red rectangular box on the left-hand side under Collateral.

  • Collateral: 100 USDC

  • Leverage: 4x

  • Borrow Ratio: 300 USDC (100% USDC borrow)

  • Total Position Size: 400 USDC

Step 2: Swap on CLMM - Define Your Range

On CLMM (Concentrated Liquidity Market Maker), your directional bias isn’t determined just by what you borrow — but what your position holds after the swap.

Remember the iPhone analogy? If you borrow an iPhone but never swap it into cash then you’re not really "short" on the iPhone.

Similarly, in this scenario, although we’ve borrowed USDC, we haven’t yet executed the correct conversion or swap to establish a directional position.

You can always see what the Swap will end up looking like under "Position Size" highlighted by the red rectangle on the left hand side .

The price range you select determines your swap result:

  • If you choose a range above the current price (right side of the curve), your borrowed USDC will be fully converted into SOL.

  • If the range includes the current price, you’ll hold a mix of SOL and USDC (as shown below).

  • If the range is below the current price, you will hold USDC and not get long SOL.

The following example demonstrates how a full long SOL position can be set up as a perpetual:

  • Set your range from $160 to $165. As the price enters this range, your SOL position begins to unwind (take profit).

  • Alternatively, set your range to $200 - $201 with a limit order that acts as a take-profit. This mimics a perpetual future with minimal linear decay or price bleed.

Step 3 : Setting up Take Profit / Stop Loss

Use "Limit Orders" to specify where you'd like to take profit and trigger a stop-loss.

You can set these during position creation or add them later by clicking on an open position.

By reversing the setup, you can also simulate a Short Perpetual Position on DefiTuna.

Key Things to Remember:

  • What you borrow is what you short!

  • Your Borrow Ratio is only half the equation—what you swap into is just as important!

  • Always pay close attention to your range setup.

  • Use limit orders as stop-loss or take-profit orders.

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