# Quanto Liquidity Provider (QLP)

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## **Overview**

The Quanto Liquidity Provider (QLP) powers trading on **Quanto.trade** by serving as the platform’s primary market maker. It ensures deep, consistent liquidity across all listed pairs, enabling minimal slippage and instant execution.&#x20;

> The QLP earns **50–300% estimated APY**, paid in **$QTO**, for its participants.

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### **Core Functionality**

* The QLP places passive limit orders in Quanto’s order books.
* When a trade matches with the QLP’s order, the QLP takes the opposite side of the position.\
  **Example:** If a user market buys 1 BTC, the QLP sells 1 BTC and holds a short position.
* This mechanism ensures frictionless execution, even during low organic order flow.

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### **Funding Fee Model**

The QLP earns **hourly funding fees** from traders holding open positions against it, calculated from:

1. Position size (notional value).
2. The pair’s prevailing funding rate.

These fees, plus the QLP’s trading PnL, form the rewards distributed to stakers.

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### **Staking into the QLP**

You can stake **QTO, QSR, or other supported collateral** into the QLP:

* **QTO/QSR staking:**
  * Earn QLP yield in $QTO.
  * Receive **$QLP tokens** (1:1 ratio to staked value) that can also be used as collateral to trade on Quanto Perpetuals.
* **Non-QTO assets (e.g., ETH, BTC, SOL):**
  * Earn QLP yield in $QTO.
  * No $QLP tokens issued for trading collateral use.
* **Risk:** All principal is at risk—losses in QLP trading are socialized across the pool.

**Loan-to-Value (LTV):** Each collateral asset has a set LTV.\
Example: ETH at 90% LTV means $10 ETH counts as $9 staked value.

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### **QLP Borrowing & Looping**

The latest update enables **borrow-and-stake mechanics** for enhanced capital efficiency.

**How it Works:**

1. Stake any supported collateral (e.g., ETH).
2. Instantly borrow QTO against your staked collateral (e.g) at your chosen LTV (zero interest).
3. Stake borrowed QTO into the QLP and get $QLP tokens, earning yield and continue to use $QLP as collateral.&#x20;
4. **Loop:** Use the $QLP from step 3 as collateral to borrow more QTO, stake again, and repeat.

**Example Looping Flow (60% LTV):**

* Stake **100 QTO** into QLP.
* Borrow **60 QTO** using your QLP.
* Stake 60 QTO → get 60 more QLP.
* Borrow again (36 QTO), stake again → total \~**196 QLP** from the original 100 QTO.

#### **Liquidation Mechanics**

* Liquidation occurs if collateral value drops or QTO price rises beyond your LTV threshold.
* Avoid liquidation by adding collateral or repaying part of the borrowed QTO.

#### **Why Looping Matters**

* **Capital Efficiency:** Earn on idle collateral while maintaining position flexibility.
* **Boosted Yield:** Compound exposure to QLP rewards without new capital.
* **Custom Leverage:** Adjust borrow levels anytime to control risk/reward.

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### **Operational Details**

* **Rewards:** Distributed in $QTO.
* **Deposits/Withdrawals:** Processed within an hour.
* **No Fees:** For staking or unstaking.
* **Transparency:** Live QLP positions visible in real time.