Pika Protocol (PIKA)

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Trading and Leverage

Pika Protocol allows users to trade cryptocurrencies, forex, and commodities with high leverage, up to 200x on Optimism. It offers one of the highest leverage options in DeFi, enabling traders to amplify their positions directly from their wallets without needing to deposit funds first.

Decentralized Perpetual Swap Exchange

It operates as a decentralized perpetual swap exchange on Ethereum Layer 2 (Optimism), providing low transaction fees and fast execution. The protocol supports token-based inverse perpetual swaps and uses a virtual automated market maker (vAMM) to maintain liquidity and price stability.

Liquidity and Vaults

Users can deposit USDC into Pika’s vault, which takes the opposite side of traders’ positions. This vault covers trader profits and receives losses, trading fees, and liquidation profits, helping maintain liquidity and balance on the platform.

Stablecoin Use

Pika Protocol also includes a stablecoin component where PIKA tokens can be minted as a stablecoin backed by decentralized derivatives. This stablecoin can be used for transactions across DeFi or to hedge against volatility.

Token Utility and Rewards

The PIKA token is used within the ecosystem for trading fees, staking rewards, and as a native gas token on the upcoming Pika Chain (a layer-3 app chain). Users can earn rewards by participating in trading, staking, and liquidity provision.

User Experience and Accessibility

Pika Protocol aims to provide a user experience comparable to centralized exchanges but with the benefits of decentralization. It supports trading directly from wallets, reducing custody risks, and offers low gas fees thanks to its Layer 2 implementation.

Advantages

• Pika Protocol is decentralized and trustless, running on Ethereum layer 2 (Optimism), which means lower transaction costs compared to Ethereum layer 1.
• It offers high leverage trading, up to 200x on crypto, forex, and commodities.
• Users can trade directly from their wallets without needing to deposit funds, enhancing control over assets.
• The platform supports multiple order types: market, limit, and stop orders, all executed via smart contracts for trustlessness.
• Deep liquidity is available, comparable to top perpetual exchanges.
• Low trading fees: 0.05% for BTC/ETH pairs, 0.1% for other crypto pairs, and 0.02% for forex.
• Liquidity providers stake in vaults that back trades, earning fees and profits from liquidations.
• The protocol plans to expand to non-crypto assets, broadening trading options.
• User-friendly interface with ongoing improvements and future plans for Layer-3 scaling (Pika Chain).

Disadvantages

• The market for forex and commodity pairs is closed on weekends and certain holidays, limiting trading times.
• Positions cannot be closed via the UI when markets are closed, and closing via smart contracts may cause high slippage.
• The protocol is relatively new and still developing, so adoption and trading volume may vary.
• The PIKA token price has shown recent declines and volatility.
• Execution fees (~0.00025 ETH) are charged per order, adding to trading costs.
• The vault has exposure limits to protect liquidity providers, which may restrict large trades.

Founders of Pika Protocol

• Pika Protocol was founded by Ethan Defillama in 2021.

Founders of Pika (AI video platform)

• Demi Guo (Co-Founder & CEO)
• Chenlin Meng (Co-Founder & CTO)

Additional Information

• Demi Guo and Chenlin Meng are Stanford University Ph.D. students who co-founded Pika, an AI-powered video creation platform.
• They started Pika in 2023, focusing on making video creation easier with AI.
• Ethan Defillama is not associated with the AI video platform Pika but with Pika Protocol, a decentralized crypto trading platform.

Investors in Pika Protocol

• Venture Capital Firms: Lightspeed Venture Partners led the Series A round, and Spark Capital led the Series B round. Other venture capital investors include Greycroft and AJI Capital.
• Angel Investors and Entrepreneurs: Actor and entrepreneur Jared Leto is a notable investor. Other individual investors include Nat Friedman, Daniel Gross, Elad Gil, Adam D’Angelo, Mike Vernal, Karim Atiyeh, Aaron Levie, Andrej Karpathy, Aravind Srinivas, Clem Delangue, Alex Chung, and Mateusz Staniszewski.
• Investment Groups: SV Angel, Conviction Capital, Beyond Capital, and AIspace Ventures are among the investors.
• Government Support: Gov.cz is also listed as an investor, adding to the diversity of supporters.

These investors have contributed to multiple funding rounds, including a recent $80 million Series B round, helping Pika Protocol grow and develop its platform.

Halal Status of Pika Protocol

• The protocol operates as a decentralized exchange for perpetual futures contracts.
• While the base technology of exchange and trading is permissible, the use of perpetual futures contracts raises concerns from an Islamic finance perspective.
• Because of these concerns, it is not clearly classified as halal without further detailed assessment of its net impact.

Answer: No, Pika Protocol is not considered halal due to the involvement in perpetual futures contracts, which raise issues in Islamic finance.