Understanding Drift Protocol

At the application level, Drift Protocol is a decentralized exchange that supports low slippage, low fees, and minimal price impact on all trades. Drift offers four primary products:

Decentralisation

Drift Protocol is a decentralised exchange, meaning:

• all deposits, withdraws, and trades are executed on-chain and are completely transparent;
• trading requires a connection to a self-custodial Solana wallet; and
• execution of all trades is facilitated by smart contract technology with no human or third-party input to execute or fill trades.

Decentralisation offers many benefits, including:

• anonymity;
• transparency;
• fairness; and
• trustlessness.

However, decentralisation also means that Drift is susceptible to the same limitations and shortcomings that arise from running on a blockchain, including:

• underlying blockchain risk;
• transaction fees;
• smart contract risk; and
• network congestion.

Drift offers four primary products:

1. Spot Trading - What is Spot Margin Trading?

2. Perpetuals Trading - What are Perpetual Futures?

3. Borrow & Lend - What is Borrow & Lend?

4. Passive Liquidity Provision - Backstop AMM Liquidity (BAL)

1. Perpetuals Trading - What are Perpetual Futures?