Once you understand [[3. Expiring Synthetics|expiring synthetics]], perpetual synthetics are within your grasp: they are financial instruments which allow you to invest in a stock or token, without actually buying it, and without fixing an expiry date in the contract. Take a moment to reflect on that. If it sounds crazy, you're not alone. The idea itself was only conceived in 1992, by an American named [Robert Shiller](https://en.wikipedia.org/wiki/Robert_J._Shiller), a name which we should all appreciate the irony of. That said, the classic example is DAI. The Maker contracts allow you to lock up your ETH and will give you DAI in return. DAI is pegged to the US dollar. Borrowing DAI has a perpetual, variable interest rate called the DSR or DAI Stability Rate. Once you have locked ETH and drawn DAI (which is really debt with a perpetual, variable interest rate), you can do one of two things. You can sell your DAI for more ETH and take a leveraged long position on ETH (if you think the price of ETH relative to USD will go up), or you can hold on to your DAI as a hedge against the price of ETH falling. In the first case, if the price of ETH does go up, you're "in the money" and will need to sell less ETH than you first bought in order to "close out" your position. The difference between the ETH you need to sell to close your position and the ETH you first bought with your DAI should be equal to the dollar value that the price of ETH increased by, multiplied by how many ETH your originally invested. If the price falls, you will need to sell more ETH than you were originally able to buy with your DAI, representing a loss. In the second case, if the price of ETH falls, you're in the money, and can buy back ETH with the DAI you held at a cheaper price, getting more ETH than you would have been able to originally. If the price rises, you make a loss. There is no expiration date on a Maker Vault, which is the name of the contract you lock ETH in in order to be able to draw DAI, hence it is a peretual synthetic. The production of synthetic assets like DAI is not limited to Maker. You can find information about RAI, a really fascinating fork of DAI, [here in the Kernel syllabus](https://www.kernel.community/en/build/token-studies/rai). RAI is also a perpetual synthetic assets. Nor are synthetic assets the only kind of perpetual synthetics available in DeFi. cTokens from Compound (along with similar products from organisations like Euler and Kashi) are examples of perpetual synthetics used to enable borrowing. Perpetuals also find a use in certain kinds of insurance protocols like Cozy and Ante. ## The Rabbit Hole Now, as is traditionally the case with financial instruments, there are lots of snake oil salesman out there who will tell you that the above - while technically true - is not very interesting, because you can't take very greatly leveraged positions using a product like Maker. Due to the overcollaterilzation requirement of most vaults (which tends to be ~150%), you can only achieve a 3x leveraged position. Traditional finance products often offer leverage of 1000x or more. Of course, this comes with significantly higher risks and margins (a "margin" is the money you need to put up to keep trading, even though you don't have to buy the actual asset outright). Indeed, it is derivative features like this which Warren Buffet once famously called "Weapons of Mass Destruction" as they can have hard-to-predict and potentially catastrophic cascading effects. Which means, when the markets begin to fall, leveraged positions fail first and can cause a string of other failures which may not have occurred if so many traders weren't "leveraged to the hilt". It also means that when markets begin to rise, leveraged positions tend to inflate those upticks into bubbles, which is equally unhealthy. Once you understand this fully, we invite you to take a look around some of the burgeoning perpetual products in DeFi and decide for yourself whether these are interesting products to participate in or not. A good enough overview to start with may be found [here](https://newsletter.banklesshq.com/p/the-perks-of-decentralized-perps). Good luck out there, and remember: **wealth means having enough to share**.