⛏️TLP

In Twin Protocol, liquidity providers or an insurance fund are not required, so the majority of fees (e.g. 70%) can be distributed back to the TLP token holders, with the rest going to staked TWIN.

If funding is mostly neutral, both long and short traders can earn yield while taking on a directional position. Alternatively, if funding favours one side, a user can enter a position to help balance the ratios while earning both funding fees and yield from opening and closing fees. This allows the platform to be used not only for leverage trading, but also for any user who wants to have a 1x spot exposure on any listed token while earning yield, or a 1x short exposure to hedge while earning yield.

The TLP token can be minted by anyone at the current price without taking on a position, and fees are distributed directly into the backing USDC pool, allowing for automatic compounding. Collateral from liquidations also increases the USDC backing.

This creates a token with a price that is not affected by speculation, but rather is directly related to fees and average trader profits and losses. The token may be desirable for hedging and can be used as a base token for exchange swap. This model allows for an unlimited amount of liquidity for trading while maintaining solvency in extreme events. A trader can open a large position on one side without any caps, while other users can enter to earn funding fees. To prevent manipulation, it may be helpful to have a small amount of price impact based on trade size, which can be programmed as a function of aggregated liquidity across exchanges.