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Qilin Protocol Community Conference Review: Why Token Reverse Contracts Are More Suitable for Decoralized Areas

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Why are small currencies unpopular on centralized trading platforms?

原文标题：《 Qilin Community Call #3 Recap 》

原文来源： Qilin Community

Original compilation: 0x13

The Qilin Protocol for Decentalized Volatility recently held its third community meeting, where the team updated the development process for Qilin, discussed the development of reversible contracts for small currencies, and why Layer 2 deployment is not a priority for Qilin at this time.

The following are the main contents of this conference:

Week 4 of May Qilin Progress:

· V1 host deployment preparation and retest.

· V2 version design review and secondary design optimization based on discussion results.

· Discuss the V2 version of the micro-service solution and make secondary improvements according to the results of the discussion.

· Selection and demonstration of Chat technology of V2 version, and determination of technical scheme.

· Confirmed the technical scheme of Uniswap pricing for V2 version and adjusted the business prototype.

Topic 1: Inverse contracts for tokens

Q1: Why are small currencies unpopular on centralized trading platforms?

In the initial stage, small currencies have poor liquidity but high volatility, and users can get higher expected returns. After a certain stage of development, volatility will decline, and so will users' expectations of volatility profits. The core of trading is the pursuit of profit. If smaller currencies can do well in terms of liquidity, centralised trading platforms will be willing to provide services. However, we found that when small currencies were in the middle of their development, there was a lot of demand for permanent contracts, but there was no exchange to serve them.

Mainstream assets themselves are diversified enough. The currency users of mainstream assets are very dispersed and highly liquid. Institutional traders, not ordinary users, are the main traders, and the possibility of price manipulation becomes very low.

小币种的用户很少，社区规模也非常小。它的特点就是筹码非常集中。少数人有能力控制代币的价格。目前，它们没有能力与主流资产竞争交易优先权。

Professional traders trade at the millisecond level and currently trade at 10-13 seconds on the chain. Mainstream currency trading seeks high efficiency, and the user experience of a centralized trading platform is naturally better (better depth), but the centralized platform does not have a small currency market.

小币种的造市能力和成本都高于现货货币。小币种合约不够去中心化，大型交易平台会虑收入问题，如果成本大于收益，他们是不愿意做小币种市场的，更愿意接受主流资产。

Question 2: Why is Qilin more optimistic about the countercontract trading market for tokens?

Vanilla contracts are U-based, and the USDT can be used to bet on the rise or fall of a small currency, both spot and contract. Spot buying in order to sell at the high. If the contract is positive, it has little to do with the asset trading. However, inverse contract settlement assets are token based and are instruments for long-term volatility, which is very scarce in the market.

If the smaller currency contracts against the other, it is possible to go long. Its advantage is to stimulate users to profit from volatility. With reverse contracts, market bulls don't leave the market, but use this tool to make more profits and help projects grow better. The trading markets will be healthier.

Q3. Why are reverse contracts best suited for pure decentralization in small coins?

小币种的用户很少，社区规模也很小。它的特点非常集中。他们很难在中心化交易平台交易，少数人就有可能控制代币价格。

The only solution is DEFI. The information on the chain is transparent and verifiable, so we are willing to accept small currency contracts. If small currency transactions are conducted on a centralized platform, then liquidity is controlled by the exchange or the project party, which is not decentralized enough. Therefore, we need to use DeFi to achieve decentralization.

Discussion Topic 1: Why is deploying Qilin on Layer2 not a major task right now

Rollup is a decentralized scaling model that can greatly improve Ethereum throughput. Without sacrificing decentralization, we studied and tested Arbitrum, Optimal Rollup, and ZK Rollup on Arbitrum, which is the Layer 2 solution currently available.

Qilin's current focus is to focus on the development of V2 and make sure it comes online on time.

Combined with the depth of Uniswap, Qilin requires that the Layer 2 solution must support Uniswap and have a large amount of fluidity before Qilin can be deployed and used.

Qilin is the primary infrastructure on the chain that needs to meet the needs of users on the Ethereum main chain first and then capacity expansion.

Rollup is progressing very quickly. After V2 stabilizes, Qilin will allocate some of its development effort to Layer 2 deployment. At this point, if Rollup has achieved initial results, we can also provide stable service on Layer 2.

At either Layer 1 or Layer 2, the fee will be a permanent limit due to the technical structure of the blockchain. Qilin's tariff rate and settlement system are premised on how to minimize the user's gas bill. For the capital ratio problem, we adopt a completely decentralized approach to solve the problem of on-chain capital ratio collection. Gas charges cost 99.99% less than other similar solutions.

Question and answer session

Question 1. What do you think about Qilin tokens being issued in the community?

Qilin: Maybe we were too slow issuing tokens. I think it's very interesting. No support or no support. In the short term, we have no intention of developing on the BSC chain, and community tokens have no impact on our development process.

The core appeal of our token issue is that it is a governance token. But we don't talk about value. For example, the price of UNI governance tokens is determined by market expectations and supply and demand for them.