👩‍🏫Overview

Bitoro Network is a leveraged trading protocol and liquidity aggregator for the perpetual futures market. Its principle goal is to unify the currently fragmented market under one platform that provides optimal prices, fees, liquidity, incentives, and unparalleled ease of use for traders.

Bitoro Platform

The Bitoro platform is a web application which provides an intuitive interface for traders looking to gain exposure to perpetual contracts. It is a single hub for accessing the fragmented liquidity in the perp market through our liquidity ecosystem aggregator. In addition to providing access to the onchain perp market, traders will be able to earn Bitoro points which articulate to Bitoro tokens ($BTORO), participate in governance proposals, and enjoy a seamless trading experience.

Perpetual Futures

Perpetual futures, or perps, are a type of derivative contract that allow traders to speculate on the future price of an asset indefinitely. Traders don’t have to own or take delivery of the underlying asset in order to trade perps. Instead, traders buy and sell contracts which derive their value based on the spot market price of the underlying asset.

Traders can take one of two positions in a perp contract: long (buy) or short (sell). Taking a long position means the trader believes the price of the underlying asset will increase, hoping to profit from buying the contract low and selling high. Conversely, taking a short position indicates the trader expects the price to decrease, aiming to profit from selling the contract high and buying back lower. Unlike traditional futures contracts that have a predetermined settlement date, perps are designed to mimic the spot price of the underlying asset, as closely as possible, through a mechanism known as the funding rate. The funding rate is periodically exchanged between long and short positions to anchor the perpetual contract’s price to the underlying asset’s market price. This mechanism incentivizes traders to take positions that reduce price discrepancies. When the perpetual contract trades at a premium to the spot price, longs pay shorts, and when the contract trades at a discount, shorts pay longs, motivating price alignment.

A unique aspect of perpetual futures is their ability to offer high leverage, enabling traders to amplify their potential gains (or losses) with a relatively small capital outlay. However, this high leverage also introduces the risk of liquidation if the market moves against the trader’s position and the maintenance margin cannot be met. The initial margin is the minimum capital required to open a position, serving as a security deposit, while the maintenance margin is the minimum account balance needed to keep the position open. If the account balance falls below a certain threshold close to the maintenance margin (varies based on the exchange) due to adverse price movements, a margin call is triggered. If the trader fails to meet the margin call requirements in time, the position is forcibly closed in a liquidation event to prevent further losses.