Trading Mechanism

PvPool (PvP) trading mechanism was first introduced by YFX V1 in 2021, allowing traders and liquidity pools to trade directly. Now, it has been widely adopted by most major perpetual protocols. In YFX V4, liquidity pools are still holding single assets but divided to multiple pools depending on trading pairs.

All traders' orders are settled with fund pools. A trader's profit from perpetual contract trading is a fund pool's loss, and vice versa. If a trader makes a profit trading perpetual contracts, the profit will be taken from an LP fund pool; if a trader suffers a loss trading perpetual contracts, the loss will be given to an LP fund pool.

A liquidity provider only needs to buy YLP (w/ or w/o leverage) to participate in market making. When a liquidity provider wants to withdraw funds from a fund pool, if the net value of the fund pool is greater than the net value of the fund pool when they deposit funds to the fund pool, they will make a profit. Otherwise, they will suffer a loss. A liquidity provider suffers no impermanent loss for adding or removing funds to or from a fund pool.