Trading on margin is an efficient way to maximize trading gains, while offsetting the credit risks of counterparties. Over the last ten years, it has expanded rapidly in traditional finance with more and more assets, and more and more counterparty types, being required to post both initial margins and variation margins in regulatory regimes around the world. The margin doesn’t need to be cash, but can be other assets and securities that an investor already holds. Using these other assets as collateral for margin trading can maximize both the utility and returns of an overall portfolio.
But in crypto-based decentralized finance, margin trading has been impossible … until now.
Unimex Network is a connected ecosystem of decentralized protocols and dapps that is uniquely positioned to solve the challenges of decentralized margin trading, options trading and more. It has recently released its latest version, expanding its range of trading features and cryptocurrencies.
Specifically, UniMex.Trade is a Uniswap- and PancakeSwap-based DeFi (decentralized finance) protocol that facilitates the trustless margin trading of native ERC-20 and BEP-20 tokens without the use of centralized oracles or servers. All trades are settled on-chain with transparent liquidity reserves, and all actions – such as opening and closing trades – are censorship-resistant smart-contract interactions. Withdrawals and deposits are always online and cannot be disabled.
Before Unimex launched, there was no direct way to short or long ERC-20 and BEP-20 tokens, despite hundreds of millions of dollars of daily trading volumes in DeFi.
Liquidity pools and margin trading
So how does this work? A central factory smart contract deploys lending pool contracts, which allow users to lend ERC-20 and BEP-20 tokens for leveraged trading. This benefits both the lenders and borrowers. Unimex ETH and Unimex BSC currently use default ETH and BNB lending pools, respectively. This is necessary for the functioning of a complete ETH/BNB denominated margin trading platform since ETH/BNB must be lent for leveraged longs. At the moment, Unimex only permits the creation of lending pools for tokens that are trading within an ERC-20-ETH Uniswap pair or a BEP-20-BNB pair.
To begin margin trading, a trader must deposit stablecoin, ETH or BNB denominated collateral in a central account. Once the appropriate collateral has been staked, the margin trader will be able to borrow ERC-20/BEP-20 tokens and ETH/BNB from relevant lending pools in order to open leveraged short or long positions, respectively.
Unimex offers a leverage range of 1x to 5x, depending on the AMM liquidity of the trading pair and the soundness of the project. In this way, Unimex allows traders to borrow a multiple of the value of their collateral in the relevant asset, up to the maximum leverage multiplier available for the particular asset.
Unimex’s margin trading engine is entirely contained within Uniswap and PancakeSwap, and so all trades are executed completely on-chain. This creates a decentralized system instead of using hashed trading parameters delivered through a centralized API, which is exposed to far greater uncertainty in the execution of orders than Unimex’s on-chain direct-to-exchange approach.
With the release of Unimex version 2, the newest features are stablecoin trading and deposits, ETH/BSC switch/toggle and spot trading. The coins that can be traded now include wrapped BNB, wrapped ETH and U.S. dollar stablecoins including USDC. Starting this week, Unimex will be releasing regular branded content and will be launching a six-figure trading competition.
With all these new features, this new decentralized margin trading facility will allow collateral lenders to generate income from their holdings and allow traders to trade their portfolios more efficiently, while at the same time keeping true to the central ethos of decentralization.
This new ecosystem will have a marked impact on liquidity, returns, risk management and volumes and is being embraced by traders around the world. Since launching in February 2021, it has been adding thousands of users every week. It is a vital next step in the professional evolution of the crypto trading universe.
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