OpenLeverage is bringing permissionless leverage trading on any token to the masses. While margin trading is very common on centralized exchanges, it is still difficult to get a new project listed on any centralized platform that offers margin trading. Binance, the largest centralized exchange, still only supports about a hundred trading pairs with margin out of the thousands of tokens they offer. Many projects are now opting to list on a Decentralized Exchange (DEX). However, there are still very few DEXs that support any margin trading, and the few that do only support a small number of tokens with margin due to reliance on oracle pricing. OpenLeverage has found a way to change this all by allowing any project to create a margin trading pool on any existing DEX by using pricing directly from a DEX.
Margin trading is attractive to projects because it helps build trade volume. When a new project adds margin trading, the volume of trades can significantly increase which is a positive boost for liquidity, and this often causes the price to increase. This in turn shows their community more confidence when their 24-hour trade volume on the project is rising on websites such as CoinGecko. The OpenLeverage protocol is designed to incentivize liquidity for projects listing on a DEX by giving more liquidity on the DEX due to margin trading volume — resulting in lower slippage to reduce risk for both traders and lenders alike.
As long as the project’s tokens have liquidity on an existing DEX such as UniSwap, OpenLeverage allows anyone in the world to add leverage for trading without any permission. This creates a new economic model for projects to incentivize the community to provide liquidity for margin trading. Once any lender adds liquidity to the lending pool, the lender will receive an LToken that provides interest from the borrower’s fees every time the pool is used to make a leverage transaction. The margin trade positions allow both going long or short on a token pair, which allows yield farmers the ability to mitigate delta risks by ensuring a delta neutral strategy when participating in liquidity mining. We expect to see very large use of margin lending pools resulting in high yield incentives for a project’s community members who participate in providing liquidity.
OpenLeverage is very excited to help new projects create liquidity pools to encourage margin trading on their projects. Doing so is a great way to lock up liquidity in the project while promoting trading volume as a way to gain exposure, while achieving yield for lenders who stake their tokens. We look forward to creating a permissionless margin trading experience for every project.
We’ll be back soon with more on OpenLeverage’s advantages and features. Stay tuned!