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 an decentralized oracle

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

1. Liquidity Providers (LPs)

The LPs are the users who deposit their asset 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.

2. 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.

The matching of the orders between the Traders and the collective of LPs in the pool is enabled by an external oracle price feed.