Pika Protocol
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Pika Exchange
Pika Exchange is a decentralized non-linear inverse perpetual swap exchange.
Perpetual swap is the most popular way to trade cryptocurrencies with leverage in centralized exchanges like Binance and Bitmex. There are two popular types of perpetual contracts: linear and inverse.
Type
Description
PNL Calculation
Exchanges
Linear
Quoted and settled in the quoted currency.
For example, ETHUSD linear contracts are both quoted and settled in USD.
Number of Contracts * (Exit Price - Entry Price)
Centralized:
Binance, Huobi, Okex
Decentralized:
Perpetual Protocol, Futureswap, dYdX
Inverse
Quoted in one currency, but always settled in the underlying or base currency.
For example, ETHUSD inverse contracts are quoted in USD while settled in ETH.
Number of Contracts * (1/Entry Price - 1/Exit Price)
Centralized:
Bitmex, Deribit, Binance, Huobi, Okex
Decentralized:
MCDEX
While linear contracts have the benefit of low exposure to the volatility of the underlying assets, it is unfavorable to those long term holders of the underlying assets, especially in the bull market. Almost all the current decentralized perpetual exchanges are only supporting linear contracts. Pika Exchange is the one that supports inverse contracts.
Pika Exchange is providing these features:
    1.
    Funding rate baked into price: funding payments are taken care of by the open and close price of perpetual contracts, so no explicit funding payments need to be made by longs and shorts, making it more friendly for DeFi folks.
    2.
    Tokenized leveraged positions: leveraged positions are tokenized into NFTs via ERC1155 standards, which allows traders to transfer or use tokens in the whole DeFi system.
    3.
    Virtual AMM with dynamic k adjustments: the “x * y = k” formula is used to determine the price of the perpetual contract, with k being dynamically adjusted based on open interest. This allows the exchange to achieve low slippage with small liquidity.
We want to give credits to Alpha Finance and Perpetual Protocol for some of these ideas. Our major difference from them is that they are providing USDT based linear contracts while Pika Exchange's contracts are token based inverse contracts. Also, a key purpose of the Pika Exchange is used to back the PIKA stablecoins.
Last modified 6mo ago
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