🗿PLP

PLP-β and PLP-α are integral components that ensure liquidity and establish the fundamental framework of the Pinnako exchange.

Liquidity provision plays a crucial role in the Pinnako ecosystem, as it determines the maximum total open interest for the protocol and assumes the risk against traders. Liquidity providers (LPs) are rewarded with 50% of the total fees and a share of traders' profits and losses (PnL).

Pinnako boasts a unique hybrid liquidity engine, allowing LPs to choose the liquidity pool they want to contribute to through our intelligent routing system. The Multi-assets LP is designed in such a way that providing liquidity to this pool is akin to holding a diversified portfolio of top cryptocurrencies, while also participating in the sharing of protocol revenue. On the other hand, the Synthetic LP eliminates the risk of holding cryptocurrencies, as it utilizes USD stablecoins by design.

It is important to note that counter-trader risk and fee-sharing are dependent on the specific engine. Providing liquidity to one engine will only share the trading fees and traders' PnL generated from that particular engine, offering LPs greater flexibility in selecting the risks they wish to take on.

PLP-β tokens comprise an index of assets used for swaps and leverage trading. These tokens can be minted using any index asset and burnt to redeem any index assets. In contrast, PLP-α consists exclusively of stablecoin assets.

Challenges

• Individual liquidity models only work well for specific type of assets and functions

• Advanced risk management for LP is required for different market conditions

• Oracle manipulation and front-running attack

What is Hybrid Liquidity Engine and how does it overcome the challenges

Hybrid Liquidity Engine organically combines multiple liquidity models into a single trading platform. Instead of trying to making one model to fit all use cases and markets, hybrid engine makes use of strengths from individuals and avoid weaknesses and thus more markets can be enabled easily without compromises.

Risks

PLP serves not only as a composite token consisting of varying weights of different tokens but also as the liquidity provider token for the Pinnako platform. As a result, when holding PLP, you are exposed to multiple risks, including swap arbitrage, profits derived by traders from longing or shorting assets, and overall negative market trends that decrease the value of the underlying collateral.

Before providing liquidity on Pinnako, it is highly recommended that you thoroughly comprehend these risks. Exercise caution when engaging with any smart contract or blockchain application. While efforts are made to minimize risks through comprehensive testing, audits, and bug bounty programs, the potential for vulnerabilities in smart contract code always exists.