> For the complete documentation index, see [llms.txt](https://docs-v1.perennial.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs-v1.perennial.finance/mechanism/market-structure.md).

# Market Structure

#### Overview

Perennial in its most basic form is infrastructure for launching derivative markets. A market in perennial is a two-sided market (makers and taker) that trades exposure to a given payoff function.  Each markets is indepedent & has isolated risk. 

A Market in Perennial is defined by things like: 

* Price feed
* Payoff function
* Utilization curve (relationship between utilization & funding rate)
* Fee structure 
* Leverage & liquidation parameters
* Maximum liquidity (a risk parameter controlling the max. size of the market)

Implications of this worth calling out:

1. Payoffs are fully synthetic — There can be a Perennial market for any price feed (or any programmable deviation of that price feed). A market could theoretically be created for crypto tokens, currencies, commodities, or any other non-manipulable price feed. 
2. Each price feed may have multiple markets —  There may be a Long-ETH market with the payoff function 1\*ETH, and a Short-ETH market with the payoff (-1)\*ETH)
3. Each payoff function may have multiple markets — There may multiple Short-ETH markets (payoff: (-1)\*ETH), each with its own utilization curve, fees structure, parameters, etc.

#### **Market Creation** 

Perennial allows for permissionless market creation — anyone can come in and launch any market they desire. We anticipate there will be markets with long / short \<asset> payoffs for many types of assets, duplicate markets for assets that tweak LP/risk parameters, and many exotic defi-native markets.

Each market created in Perennial has a market operator controlled by an on-chain address (typically a multisig). The market operator serves a few functions:

* **Design & deploy the market** — pick market, choose price feed & utilization curve, launch market&#x20;
* **Set and tune parameters** — set initial parameters and adjust them in response to market **Manage**&#x20;
* **Market evolution** — upgrade the market, help with distribution to users, and more

In return, the market operator receives a portion of the fees collected by the market, creating an incentive for market creation.&#x20;

Because market operators have the ability to change important system parameters, we recommend that operator keys are managed by a multisig with a timelock (such that there is a delay before changes are implemented).&#x20;

Most markets will be operated by ecosystem participants — For the Long-SQTH pool, the market operator is Opyn team, and the key is controlled by Opyn protocol core multisig w/ timelock.&#x20;

Some markets will be protocol-owned — For the Long-ETH & Short-ETH markets, the Perennial protocol will be the market operator, and the key is initially controlled by Perennial's core multisig w/ timelock.&#x20;