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What Is Qilin Protocol (QI)?
Qilin Protocol is a decentralized risk-optimizing protocol for asset derivatives trading on Ethereum. Qilin supports customizable composable derivative contracts based on any asset and risk-adjust contract pricing based on LP risk. By using Chainlink's oracle, Qilin enables an ETH/USDC perpetual contract market based on peer-to-pool liquidity, as opposed to the traditional order book model. Furthermore, Qilin uses Uniswap V2, Uniswap V3, and Sushiswap time-weighted asset prices as price oracles to support permissionless perpetual market launches.
Users on Qilin Protocol will trade in an order book market with a liquidity pool of a designated asset. The liquidity pool provides the margin for long and short contracts and acts as the counterparty for users' trades. Trade settlement will depend on the pool's denomination: if a liquidity pool is denominated in a stablecoin asset, trades are settled in stablecoin; if the pool is denominated in a cryptocurrency, trades are settled in that currency.
Finally, Qilin Protocol is completely permissionless, meaning that participants are free to open new contract positions, provide liquidity, or create new liquidity pools. This DEX model contrasts the CEX model, in which a single party has complete discretion over the formation of new markets.
Who Are the Founders of Qilin Protocol?
The founders of Qilin Protocol are unknown; however, the protocol is being developed by a Beijing-based team that raised an $800,000 seed round from funds like Continue Capital, Fundamental Labs, MATH Foundation, Multicoin Capital, Yuanyuzhou Ventures, and other institutions.
Multicoin Capital, the Protocol’s lead investor, is a thesis-driven investment firm with stakes in several crypto projects like Eden Network, Saber, and Solana. The Multicoin Capital team was pleased after closing the seed round, calling Qilin's understanding of the derivatives market "very professional and forward-looking."
Currently, Qilin Protocol is working on a V2 version of its platform after a V1 version was successfully released in June 2021.
What Makes Qilin Protocol Unique?
Qilin Protocol promises vastly superior performance compared to its decentralized rivals, with up to 10,000X lower gas fees, 50X higher capital efficiency, and a 10X larger on-chain leverage range.
Its peer-to-peer liquidity provision lies at the product's core, allowing traders to fill orders without slippage, thus fulfilling its promise of higher capital efficiency. The slippage curve is calculated by the unmatched position value and the pool asset value; then, the slippage is added to the TWAP price feed to finalize the contract price. The liquidity pool is the counterparty of all traders in Qilin's V2 version and receives trading fees and funding rates as sources of income. The liquidity pool's losses are shared equally based on the share of each provider's deposit in the pool, while liquidators receive liquidation rewards.
Qilin's liquidity providers can be either passive LPs, token holders earning a yield from transaction fees, or professional LPs, who utilize market-making strategies and hedge their risk exposure on other markets.
Funding rates in Qilin Protocol are determined by the size of a trader's unmatched position and sent to the liquidity provider. The protocol charges funding based on the number of positions a trader has on a per-block basis, implying that the more positions a trader opens, the higher their funding rate will be and vice versa. Qilin also charges a 0.1% fee for trading, which is collected upon closing a position. Furthermore, protocol fees make up a percentage of the trading, funding, and liquidation fees. The protocol fees are then used to support community and ecosystem development.
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How Many Qilin Protocol (QI) Coins Are There in Circulation?
Qilin Protocol is currently not trading and has not yet announced when its QI token will be public. The protocol closed a public testnet trading competition on Rinkeby Testnet in December 2021.
How Is the Qilin Protocol Network Secured?
Qilin Protocol brands itself as an Ethereum-based protocol, although it does not detail how it can achieve capital efficiency and close-to-zero gas fees on the Ethereum chain. Presumably, Qilin Protocol utilizes an undefined Layer-two solution.
Ethereum is one of the most popular blockchains and the go-to solution for many decentralized applications and exchanges to launch their tokens and projects on. It is secured by a proof-of-work consensus mechanism that requires miners to mine new Ether. A set of decentralized nodes validates transactions and secures the Ethereum blockchain.
Where Can You Buy Qilin Protocol?
Qilin Protocol is currently not available for public trading.