Pool-to-Peer Mechanism

The Pool-to-Peer model is a mechanism of liquidity provision for perpetuals DEXs where trader's orders are instantly matched and executed against a pool of liquidity at the price published by a decentralized oracle. This model eliminates the need for traditional order books by creating a unified liquidity pool that serves as the counterparty to all trades.

---

There are two main entities in a pool-to-peer model:

Liquidity Providers (LPs)

The LPs are the users who deposit their assets in the pool which will in turn act as the liquidity against which other traders can trade and in return the LP provider earns fees. LPs essentially become the counterparty to all trader positions, earning a share of trading fees, margin fees, and liquidation penalties in proportion to their pool contribution.

Traders

The Traders are users who want to use the DEX to long or short any assets available in the pool on their desired level of leverage. The Traders will collateralize their position using any asset and then gain the price exposure of the asset in the pool. When traders profit, they're paid from the pool; when they lose, their losses flow back to the pool, benefiting LPs.

---

Oracle-Enabled Execution

The matching of the orders between the Traders and the collective of LPs in the pool is enabled by an external oracle price feed. This oracle system provides real-time market prices, allowing for instant trade execution without waiting for order book matching or dealing with slippage from insufficient liquidity at specific price levels.

---

Key Benefits

Instant Execution:	No waiting for order matching
Deep Liquidity:	Pool aggregates all LP contributions
Minimal Slippage:	Oracle pricing eliminates bid-ask spreads
24/7 Trading:	Always available liquidity for supported assets