Rage Trade: A New Paradigm for Perps

Rage Trade is a new protocol for trading an ETH perpetual swap launched on September 7. Although new and unproven, it stands to be a serious competitor in on-chain leverage trading for ETH. Rage uses a novel “recycled liquidity” mechanism that aims to offer a higher yield for LPs across many chains; this could aggregate capital to create the deepest ETH/USD liquidity pair for traders.

Overview

Rage Trade lives on Arbitrum but utilizes (“recycles'') liquidity from other protocols across many chains. LPs in yield generating protocols such as Curve, GMX, Uniswap, Sushiswap, Balancer, Rari, Aave, Compound, Convex and more will be able to deposit their LP tokens into vaults to provide liquidity to Rage. Today, the only active vault is for Curve’s tri-crypto pool, holding about $1.7m in liquidity.

When an LP deposits (locks) LP tokens in the smart contract, Rage automatically mints equal amounts of “virtual USD” and “virtual ETH” on Arbitrum at 20% of the notional value and provides the assets to a custom Uniswap V3 pool. For example, a deposit with a value of $1000 would result in $100 in vUSD and $100 in vETH minted. The virtual tokens are over collateralized by the LP positions. Traders are able to lever long or short ETH against the pool, which follows a traditional xy = k curve. Rage automatically provides the vETH and vUSD as concentrated liquidity around the current ETH price.

LPs can come from any Stargate supported chain: Ethereum, BNB chain, Matic, Avalanche, Optimism, Arbitrum, or Fantom with more to come. Currently, only some of these chains have planned vaults. All liquidity is aggregated by printing virtual tokens on Arbitrum where the trading takes place. Layer Zero (Stargate’s parent protocol) functions as the cross-chain data transfer mechanism while Stargate is used to transfer USDC to or from other chains. Rage will only offer an ETH perpetual swap with up to 10x leverage either long or short for the foreseeable future, hoping to capture as much liquidity as possible.