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There are four types of participants in Qilin’s ecosystem: liquidity providers, traders, liquidators and developers.
- Liquidity providers provide liquidity in the form of ERC20 tokens to the liquidity pool.
- Traders can open and close contract positions via liquidity pools while paying a trading fee (0.1% of position size) to the liquidity provider.
- Liquidators are rewarded with liquidation penalties from positions when they are liquidated. The liquidation penalty starts at 10% of the margin and increases with new block height, with a cap of 100$ of the margin.
- Developers can build on Qilin’s smart contracts to build programs for tokens, trading interfaces, trading experiences, etc.
Liquidity providers can be further divided into different types on Qilin:
• Passive LPs are token holders who want to earn a yield by holding their assets from transaction fees. They bear the risk exposure from unmatched positions.
• Professional LPs have their own market-making strategies to hedge against the risk exposure on other markets to achieve delta-neutral exposure.
• Project teams can also choose to be the liquidity provider to create a liquid perpetual market for their token.
• DeFi enthusiasts who actively seek new markets to experiment or yield opportunities in new markets.
There are several types of traders on Qilin.
• Volatility traders: traders who use perpetual contracts to make directional bets on the volatility of an asset
• Arbitrageurs: traders who profit from price differences between different markets
• Bots: smart contracts that execute trades on a protocol
Developers can build Qilin’s derivative functionalities into other protocols or applications with Qilin’s open-sourced code base and front end functionalities.