# Overview

![](https://754592214-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MY2KLV548KIYe8apY9V%2F-MY2KNtct8oqyC4gPTZc%2F-MY2LSd6ErlURFM-LoEx%2FScreen%20Shot%202021-04-07%20at%205.27.02%20PM.png?alt=media\&token=4bafcf0d-791f-4fb2-b17d-68183e0900bc)

Pika Protocol is a stablecoin protocol backed by decentralized derivatives. It consists of two components: **Pika Exchange** and **PIKA stablecoin**.

Pika Exchange is a perpetual swap exchange that supports leverage trading. It supports token based inverse perpetual swaps. The underlying of the exchange is a virtual automated market maker(vAMM).

PIKA Stablecoin is a stable currency backed by Pika Exchange with these features:

* **Stable:** it uses perpetual swap positions to back its price stability around a 1 dollar target. PIKA is minted by opening a 1x short position of an inverse perpetual swap.
* **Capital Efficient:** a PIKA is minted by depositing one dollar value of supported tokens(e.g., ETH, WBTC), achieving better capital efficiency than overcollateralized stablecoins.
* **Yield-bearing:** yields are generated from trading fees of perpetual contract exchange.