What is Drift Protocol?
Drift is a decentralized protocol for perpetual futures and margin trading. It focuses on capital efficiency, predictable funding rates, and composability with other DeFi primitives (vaults, oracles, and liquidations).
Core Components
How to Open a Position
Use MetaMask, WalletConnect, or a hardware wallet. Ensure you have base collateral (USDC, USDT, or supported stablecoins).
Deposit to your margin account. Choose cross or isolated margin depending on risk appetite.
Pick a market (e.g., BTC-PERP), set size and leverage, and preview the estimated liquidation price.
Use limit or market orders. Orders are settled on-chain; monitor funding and maintenance margin.
Funding & Mark Price Explained
The mark price is typically derived from a TWAP or oracle to prevent manipulation. Funding pays or receives a periodic fee: when mark is above spot, longs pay shorts; when below, shorts pay longs. Funding aligns incentives and keeps the perpetual price tethered to the underlying index.
Risk Management Tips
- Avoid excessive leverage; use stop-loss orders where possible.
- Prefer isolated margin for experimental or high-volatility trades.
- Keep collateral denominated in stable assets to reduce P&L volatility on collateral.
Developer Snippets
// Example: fetch open positions const positions = await driftClient.getOpenPositions(walletAddress);
FAQ
How often is funding paid?
Funding intervals vary by market (commonly 1 hour). Check market parameters before trading.
What triggers liquidation?
When maintenance margin is breached; liquidators can close positions partially or fully to restore solvency.
Are funds custodied?
No — Drift operates non‑custodially; users maintain control via wallet signatures and on‑chain account management.