Qilin Protocol
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What is Qilin?
Qilin Labs
Qilin Labs contributes to the development of Qilin Protocol and its app interface.
Qilin Protocol
Qilin is a decentralized derivatives trading protocol on Ethereum that allows for customized composable derivative contracts based on any asset and risk-adjust contract pricing based on LP risk.
Qilin Protocol V1 uses Chainlink’s oracle to enable an ETH/USDC linear perpetual contract market based on a peer-to-pool liquidity model. Rebase Funding Rate is an added feature to mitigate liquidity provider risk. V1 serves as the beta test version of Qilin.
Qilin Protocol V2 uses Uniswap V3, Uniswap V2 and Sushiswap TWAP as price oracles and supports permissionless perpetual market launches for both linear and inverse contracts. V2 has an added dynamic slippage functionality.
Qilin App Interface
A web interface that allows easy interaction with Qilin Protocol is built by Qilin Labs and is one way users interact with the protocol..
Qilin Governance
Qilin Protocol’s governance is conducted by the QI token (not yet released).
Qilin Protocol vs Other Derivative Markets
To understand the difference between the Qilin protocol and the traditional derivative market, it is helpful to look at two areas: how the peer-to-pool liquidity design differs from the traditional central order-book-based exchanges, and how permissionless systems are different from traditional permissioned systems.
Peer-to-Pool vs Order Book
Traditional exchange markets are usually accessed through a central order book, on which buyers and sellers create orders organized by price level that is filled by supply and demand. To guarantee effective liquidity, these exchanges often partner professional market makers to provide contract orders on the order book. Market making contract pairs generally requires a high level of expertise in trading due to the high risk profile in the market making contracts, and hence is a highly centralized activity in exchange operations.
For a high-level overview, a peer-to-pool liquidity design decentralizes market making and buy and sell orders in an order book market with a liquidity pool of a chosen asset. As long and short contracts are created, the outstanding margin is provisioned by the liquidity pool. Based on this liquidity model, liquidity can be enabled for contract trading for all assets. If the pool is denominated in a stablecoin asset, then the trading is settled in that stablecoin asset, and the contract is linear; if the pool is denominated in a crypto/token asset, then the trading is settled in that asset, and the contract is inverse.
Permissionless System
The second difference from the traditional markets is the permissionless design of the Qilin protocol. Permissionless design means that the protocol’s services are entirely open for public use, with no ability to selectively restrict or filter who can or cannot use them: anyone can create contract positions, provide liquidity, or create new liquidity pools at will. This is a departure from traditional financial services, which typically restrict access based on geography, wealth status, and age.
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