Source publication: November 5, 2026, at 09:46:30 (UTC+8). This article reflects the product description and examples reported at that time.
Paragon, a HIP-3 trading platform, introduced Power Perps as a way to access option-like payoff curves through a familiar perpetual-contract interface. Its starting point, HYPE², tracks the square of HYPE’s price rather than its price directly. There is no strike price or expiry date.
The appeal is simpler access to convex exposure. The trade-off is continuing funding costs, a different liquidation profile and less flexibility than conventional options. A squared payoff is not free leverage, and removing expiry does not remove holding costs.
The pitch: options-like exposure without an options interface
BlockBeats placed Paragon’s announcement against growing onchain options activity. It reported September notional trading volume of $4.829 billion, up 121.7% month over month, while monthly premium volume had risen from more than $20 million at the beginning of the year to more than $80 million. Hyperliquid founder Jeff had also publicly discussed opportunities to develop options.
Power Perps address a different entry point: traders accustomed to opening perpetual longs and shorts, rather than navigating strikes, expirations and Greeks.
The concept predates Paragon. Paradigm’s 2021 Everlasting Options explored maintaining non-expiring options exposure through recurring funding payments. Its subsequent Power Perpetuals work examined tracking powers of an asset’s price. Opyn later implemented ETH² exposure through Squeeth. Paragon’s proposal brings this type of product to Hyperliquid’s order-book infrastructure.
Instead of dividing activity among many strikes and expirations, traders in the same underlying asset and power can share one order book. That simplifies the market structure, but does not reproduce the full range of options payoffs.
What the squared price actually changes
A fixed-size ordinary perpetual position has a linear payoff: each $1 move in the underlying produces the same dollar gain or loss. Leverage steepens that line without changing its shape.
A squared contract changes the shape itself. Assume the underlying starts at $100 and its squared index is normalized to 100:
| Underlying move | Squared-index result |
|---|---|
| Rises 10% to $110 | Index reaches 121: a 21% gain |
| Falls 10% to $90 | Index reaches 81: a 19% loss |
| Rises 50% | Index gains 125% |
| Falls 50% | Index loses 75% |
| Doubles | Index becomes four times its initial value |
A cubed index would become eight times its initial value if the underlying doubled.
For an underlying return of r, the squared index’s return is:
2r + r²
The first term resembles an initial 2x long exposure. The second is non-negative in either direction. Relative to that linear comparison, it adds upside and reduces downside before funding and other costs. It does not mean that losses are small: a 50% fall in the underlying still produces a 75% decline in the squared index.
This changing price sensitivity is convexity. As the underlying rises, successive dollar increases generate larger gains for a squared long. As it falls, successive dollar declines generate smaller losses.
The missing cost in the attractive payoff chart
The source illustrates convexity with a hedged position: buy one squared contract at 100 and short two units of the underlying through a linear contract.
If the underlying rises to $110, the squared long gains 21 and the short loses 20, leaving a gain of 1. If it falls to $90, the long loses 19 and the short gains 20—again leaving 1. At either $120 or $80, the combined price gain is 4.
Before costs, that combination’s price profit is:
(Underlying price − 100)² ÷ 100
Those examples omit the cost of obtaining convexity. From the other side, a market maker shorting the squared contract and buying two underlying units experiences the corresponding loss. Maintaining the hedge requires further adjustments as prices change. The squared price changes accumulated through that process are connected to variance; more volatile price movement increases the cost of supplying convexity.
Accordingly, power-perpetual longs generally pay shorts for convexity through recurring funding, in addition to ordinary carrying costs. That component is related to variance—volatility squared—while the contract’s market premium or discount also affects the final funding rate.
A payoff chart that excludes funding is not a complete account of realized returns. With no expiry, those holding costs can continue accumulating indefinitely.
Liquidation: fully collateralized is not the same as leveraged
Consider $100 of capital supporting either a 2x linear long or a fully collateralized squared long initially worth $100.
If the underlying falls from $100 to $50, the linear position loses $100, with liquidation in practice occurring earlier. The squared position falls from 100 to 25, leaving $25 of equity. Ignoring funding and losses elsewhere in a cross-margin account, that fully collateralized position would not be liquidated solely because the underlying price fell.
But adding leverage to the squared contract sharply changes the result. According to examples in Paragon’s risk documentation cited by BlockBeats, excluding accumulated funding and other account assets:
- A 2x HYPE² long would be liquidated after an approximately 22.5% decline in HYPE.
- A 3x HYPE² long would be liquidated after an approximately 10.6% decline.
Shorts face a different asymmetry: their losses accelerate as the underlying rises. Even a 1x squared short can be liquidated.
Volatility exposure, not a substitute for every option strategy
Combining a squared long with a linear short creates a payoff curve that rises in either direction away from the initial price. This resembles the broad directional logic of an options straddle, which combines a call and put at the same strike and expiry.
But price movement must be sufficient to offset funding costs. Reversing the combination—shorting the squared contract and buying the corresponding underlying or linear exposure—creates short-volatility exposure. Funding received may produce a return if prices remain near the entry level, while sufficiently large moves in either direction generate hedged losses that grow with the square of the move.
The resemblance to options has limits. Strangles use different strikes; spreads use strikes to define payoff boundaries; covered-call and covered-put strategies exchange specified portions of potential returns for premiums. Those structures have strike-defined payoff kinks and typically an expiry.
A squared contract combined with linear exposure instead produces a smooth curve. Adjusting position sizes can approximate some option strategies over a limited price range, but cannot precisely reproduce every cap, floor or flat payoff interval.
The product-design claim—and its limits
Hyperliquid supplies the order books, underlying markets and margin framework; Paragon uses those foundations to design a different payoff curve. Existing perpetual liquidity can support hedging, while developers may package combinations to reduce manual position-building and adjustment.
BlockBeats framed this as HIP-3 platforms moving beyond selecting popular traditional-finance assets to creating new derivative forms. The supplied report explains the proposed mechanics, but does not establish sustained liquidity, adoption or realized performance after funding.
The distinction matters: a simpler interface can make convexity easier to access without making its economics simpler. The product’s appeal rests on its payoff shape; the practical assessment also requires funding costs, collateral requirements and liquidation exposure.