Pika

Derivatives

Pika is a perpetual swap exchange native to Optimism that is built on the concept of a virtual AMM (vAMM).

Risk Rating
Watch Out
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Pika is a decentralized perpetual swaps exchange built on Optimism that leverages the virtual AMM (vAMM) design popularized by Perpetual
What we like less
The protocol is backed by liquidity providers (LPs) who act as the counterparty for all traders on the platform as it pays for trader profits and receives losses.
What it means for you
Pika enables users access to high leverage (up to 100x), several assets to trade with, low slippage, and low transaction fees.
Information
Exploit/Hacks
None
Info
Key Metrics
  • TVL: $418.2K (Rank #205)
  • TVL Ranking by Derivatives: #10
  • Blockchain: Optimism
  • Chain TVL
    • Optimism: $418.19K
Risk Assessment
Watch Out
Protocol Code Quality
  • Code reviewed by at least one experienced auditor; PeckShield audited in July 2022
  • Anonymous team reduces transparency
  • No documented protocol hacks since launch
Protocol Maturity
  • Latest protocol version launched in 2022; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Bottom 80% by total value locked increases risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • Timelock is less than 48hrs, which provides users with less time to exit if any malicious upgrades are approved
  • No governance token and/or contracts are fully immutable
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • This protocol is susceptible to risks related to decentralized derivatives, such as LPs serving as the counterparty for all platform traders
Things to know about Pika

How Pika works

Similar to Perpetual's vAMM model, Pika uses virtual liquidity for each trading pair to support the same level of liquidity as top perpetual exchanges. Pika uses a hybrid price feed of Chainlink oracles with dynamic adjustments and a fast oracle from top exchanges to price the assets. The protocol supports all trading pairs that have a Chainlink oracle. Whenever an order is submitted, the fast oracle will first fetch the median price from leading volume exchanges and update the mark price before executing the order. This serves to prevent the oracle frontrunning as the price is determined only after the order is submitted. The Chainlink oracle is used with a bid/ask spread whenever the fast oracle is not updating or its price deviates more than 2% from Chainlink. Pika has a funding mechanism to balance the long and shorts for each trading pair. The liquidity vault always serves as the counterparty so it is constantly earning funding fees. Funding is paid or received when traders close their positions. Users who stake in the liquidity vault take the opposite position of all traders on the platform. The vault pays when traders profit and receives when traders lose. To protect the vault from highly volatile conditions, the vault has a max exposure parameter for each trading pair. When this threshold is reached, traders cannot open any additional positions that increase the vault's exposure, but can open positions in the opposite direction that decreases the vault's exposure.

How Pika makes money

The protocol charges a small execution fee (paid to keepers who are responsible for executing submitted orders with latest oracle update) and a trading fee of 0.1% for each trade (forex pairs have a 0.03% fee because of its lower volatility). The trading fee is distributed 50% to liquidity providers (LPs), 20% to be used as protocol-owned liquidity (POL), and 30% to protocol revenue. Pika also charges a small amount of interest based on how long the trader's position has been open.

How you make money on Pika

You can earn protocol fees and liquidation profits by providing liquidity on Pika. You can also use the platform as a trader to place directional bets on assets or hedge your existing positions.