Thin Liquidity Environments
Permissionless perpetual markets often launch with insufficient depth, creating asymmetric execution risk for all participants. Shallow order books amplify slippage and enable price manipulation during periods of stress.
Solana-nativePermissionless perpetual markets infrastructure
Capital backstop for permissionless perpetual markets.
PercoSec enables insured perpetual markets, risk-priced capital allocation, and transparent insolvency handling.
Non-custodial. Deposits may be used to cover insolvencies. Losses possible.
Architecture
Solana SVM
Settlement
On-chain
Trigger Model
Deterministic
Pool Type
Market-specific
The Problem
Structural failure modes in permissionless perpetuals
Each perpetual market introduces compounding systemic risk. Without a dedicated capital buffer, protocol insolvencies are resolved ad hoc - or not at all.
High-Leverage Exposure Stacks
Protocols permitting leverage ratios above 20x compound systemic exposure. A single large position liquidation can trigger cascading margin calls across correlated markets, destabilizing the entire system.
Oracle Dependency Risk
Price feeds introduce a centralized failure vector. Oracle latency, staleness, or manipulation can cause premature liquidations or prevent justified ones - leaving protocols insolvent with no recovery path.
Liquidation Engine Failures
During extreme volatility, liquidation bots may fail to close positions at the intended price. Collateral gaps between trigger price and realized fill create deficit exposure that the protocol must absorb.
Bad Debt Cascades
Unresolved insolvencies propagate. When one market's bad debt exceeds its reserve, it drains shared liquidity or socializes losses to all participants - disproportionately affecting passive capital providers.
Each failure mode increases in severity when compounded. Permissionless markets require explicit, on-chain backstop mechanisms rather than social recovery.
The Solution
Market-native risk infrastructure
PercoSec introduces a structured capital layer that sits between perpetual market users and systemic insolvency - with deterministic rules and on-chain verifiability.
Market-Specific Insurance Pools
Each perpetual market is paired with a dedicated insurance pool. Capital is deployed against the specific risk profile of that market - not shared across correlated or unrelated exposures. Pool sizing scales with open interest and volatility.
Pool architectureQuantitative Risk Scoring Engine
A deterministic scoring model evaluates each market on four factors: leverage concentration, open interest-to-liquidity ratio, realized volatility, and funding rate variance. Scores gate capital allocation and trigger warnings before insolvency.
Risk formulaDeterministic Insolvency Triggers
Claims are triggered when the post-liquidation deficit exceeds the market-defined threshold. Payout is rule-based and verifiable on-chain. No discretionary governance vote required during a crisis.
Trigger logicCapital Efficiency Modeling
Premiums are priced based on real-time risk scores rather than fixed-rate schedules. Lower-risk markets pay less for coverage, attracting more capital. High-risk markets pay more, creating accurate incentive alignment.
Fee structureHow It Works
Three participants. One capital layer.
PercoSec connects market infrastructure, liquidity capital, and trading activity through a structured insurance mechanism.
Market Creators
Deploy a new perpetual market with defined parameters (base asset, oracle source, max leverage)
Configure an associated insurance pool with minimum reserve requirements
Set premium rates and risk thresholds that gate pool activation
Market goes live only when pool is sufficiently capitalized relative to open interest
Market creators bear the configuration risk. Incorrect thresholds result in inadequate coverage.
Capital Providers
Deposit collateral (USDC or SOL) into a specific market's insurance pool
Receive yield from trading fees, funding fees, liquidation penalties, and premiums
Capital is locked per epoch (configurable, typically 7–30 days) to prevent bank runs
Insolvency events draw from pool proportionally - providers bear the residual risk
Capital is at risk. Providers should evaluate market risk scores before depositing.
Traders
Open leveraged positions on insured markets with confidence in backstop existence
Pay a marginal premium (embedded in fees) that funds the insurance pool
In a liquidation deficit event, the pool covers the shortfall automatically
No action required from traders during insolvency - payout is deterministic
Insurance coverage is not a guarantee of profitability or protection from normal trading losses.
Capital Flow
How value accumulates in the insurance pool
Multiple fee sources continuously capitalize the insurance pool. Payouts occur only when deterministic insolvency conditions are met.
Pool inflow sources
Funding FeesVariable
Periodic payments from long/short position imbalance
Trading Fees0.05–0.1%
Percentage of notional per trade routed to pool
PremiumsRisk-priced
Insurance premium paid by market creators per epoch
Liquidation Penalties0.5–1.5%
Portion of liquidation fee directed to the pool
Outflow
Insolvency PayoutDeterministic
Triggered only when post-liquidation deficit exceeds market-defined threshold. Proportional to pool utilization at time of claim.
Architecture Principles
Designed for verifiability, not trust
Every component of PercoSec is built to minimize trust requirements. The system is designed to function correctly even assuming adversarial participants.
Built on Solana
~65,000 TPS capacity, sub-$0.001 fees