Twin Protocol is PvP AMM Synthetic Assets Exchange, matching traders against each other in leverage trades, with the option for liquidity providers to participate. The protocol works by allowing traders to open long or short positions at the current spot price of the asset, and charges a funding fee based on the ratio of longs to shorts.
The protocol utilises an intermediary token called TLP, which is minted when traders deposit collateral, and is used to compensate for any difference in total profits and losses. The TLP token can be minted by anyone at the current price, and fees are distributed back into the backing USDC pool, allowing for automatic compounding. This creates a token with a price that can be used for hedging and earning yield.