Introducing Qilin

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Introducing Qilin
Thesis
Qilin Protocol is dedicated to enabling fully decentralized derivatives trading that offers key features and functionality commonly available in a centralized marketplace.
From its conception in 2020, Qilin's vision has been to design a fully decentralized derivatives trading protocol that offers on-chain derivatives traders the user-friendly features of a centralized marketplace while also providing opportunities and incentives for traders and liquidity providers that are not available via centralized exchanges (CEX). Qilin's unique re-engineered marketplace design makes this possible.
Permissionless Derivatives
Conventionally, derivatives trading has been limited to select groups of assets that can satisfy requirements imposed by centralized marketplaces, which typically include:
High liquidity in the spot market; 
Minimum trading volume requirements; 
Other token distribution checks, etc.
Despite being traditionally limited to a select group of assets, a derivative market provides assets with substantial benefits that include:
Increased volatility, which generates more profit opportunities; 
Increased spot trading volumes; 
Increased capital efficiency for asset traders (e.g. through leverage, etc.)
Few assets have been able to meet the requirements usually imposed by centralized marketplaces. As a result, a majority of assets cannot enjoy the benefits of a derivatives market. Even assets that are paired with a stablecoin derivatives trading pair would still not have access to the benefit of being the margin token:
Increased trading utility and demand for the token; 
Additional yield opportunities as the margin/LP token, etc.
An inclusive marketplace where crypto assets can enjoy these benefits permissionlessly has yet to exist within DeFi. Although many protocols implement semi-decentralized features on-chain, on the design level these protocols still rely on centralized decision-making (e.g. asset pair availability) as well as centralized liquidity providers for certain asset pairs pertaining to market depth.
Full decentralization
We believe a fully decentralized trading protocol ought to achieve it in three senses of DeFi:
On-chain implementations of key mechanisms
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AMMs have made possible decentralization of a key component of a financial marketplace: liquidity matching. Swaps can be placed and matched in an on-chain environment through an AMM without the involvement of a centralized order book relying on an off-chain database.
However, for the derivatives market, there are several other components that are not automatically decentralized as a result of AMM. In particular, the funding rate and the creation of the margin asset pool require additional mechanisms to execute on-chain.
An on-chain funding rate would provide arbitrage and risk opportunities directly for long and short traders, increase protocol efficiency and do away with the need for off-chain settlement. 
Margin asset pool selection is a necessary step when it comes to decentralizing the process of market listing and achieving full permissionless market access. For many DeFi protocols, this functionality is turned off for user-level access and is gatekept via the team.
A DeFi-Native Derivatives Exchange
The third thesis of Qilin is to build a brand-new exchange structure that offers functionalities unavailable in the centralized exchange framework. Currently, we believe the full advantage of DeFi lies in the following areas:
Composability: financial primitives such as liquidity, risk, and leverage can be tokenized and utilized by other protocols. This increases capital efficiency as liquidity locked in one protocol could be used in another protocol. The permissionless flow of assets between protocols means that a new asset could be tested for adoption 
Open mechanism design: Centralized marketplaces have largely relied on the same design for their liquidity matching engines, limit order executions, etc. DeFi remains lacking in these areas, which presents opportunities for protocol-level innovations to offer an improved user experience.
We’ve identified the following areas as opportunities for a decentralized exchange protocol:
Expanding the liquidity market for derivatives; 
A leverage token; 
A synthetic token that can be redeemed for the underlying asset anywhere, etc.
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Protocol Overview
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