Perpetual demand lending pools

The liquidity pools behind decentralised perpetuals exchanges (GMX's GLP, Jupiter's JLP, Hyperliquid's HLP). LPs deposit a basket; traders borrow under-collateralised, single-purpose loans to open levered positions and pay a fee; arbitrageurs keep the pool at a target composition. A price move opens two arbitrages that bracket a sustainable fee $f = \Theta(1/L_0)$: funding-rate arbitrage of size $\ell = L_0(p/p_0-1)$ and a CFMM-style price-impact arbitrage solving $G'(x^\star)=1/p$. The target-weight mechanism pays a discount to LPs who rebalance the pool — GMX's discount function is an explicit PID-like instance — and provably bounds an LP's delta, which is why PDLP positions are so much easier to delta-hedge than CFMM positions.

$\gamma_L=\kappa\!\left(\tfrac{L}{S}-\tfrac{p}{p_0}\right),\qquad w(p,R)=\tfrac{p\odot R}{p^\top R},\qquad \pi_{\text{new}}=\tfrac{f}{\gamma}\Sigma^{-1}\ell-\Delta$

Code: mechanisms/pdlp.py · Demo: examples/pdlp_demo.py · Research: perpetual-demand-lending-pools.md

Paper: arXiv:2502.06028