Open Leverage is a new protocol that allows traders to leverage their full trading capital and open margin positions for any crypto token on Kyber Network. This means, users can trade with the same amount of funds on multiple tokens in different markets without ever having to close or liquidate those positions – all while benefiting from near-zero slippage fees.
In “binance leveraged tokens risk” it is explained how the Open Leverage protocol can be used to create a new age margin trading protocol for all crypto tokens. The article also explains the risks of using this type of trading strategy.
The emergence of capital-efficient models and procedures contributed significantly to Defi’s parabolic expansion. Traders may now access all major crypto assets with deep liquidity thanks to decentralized exchanges and lending protocols. Every major exchange has a large number of trading pairings for well-known assets. Margin trading is thus best suited to major cryptocurrencies with specialized brokers and liquidity pools.
Margin trading is currently only possible on controlled exchanges like Binance. Despite the fact that consumers may trade with confidence, they must still be concerned about regulatory difficulties and other issues that may arise as a result of a centralized body in the crypto-verse. We also know that each big advancement in the Defi sector starts with communities. As a result, the public has the right to select which trading pairs are allowed for margin trading.
Open Leverage Finance is presenting a new protocol for permissionless lending and margin trading to solve the problems of a constrained trading market. In this post, we’ll take a closer look at the Open Leverage protocol and see how it’s being used in the Defi to let traders construct their own margin markets.
What is Open Leverage?
Open Leverage is a lending margin trading system that does not need authorization. Let’s have a look at it in more detail. Because anybody may construct margin trading markets and inject liquidity to prevent price slippage for traders, it is permissionless. Because traders demand more funds, lenders will assist them in meeting their needs. They get risk-adjusted returns in exchange.
There is always a danger when it comes to new tokens. The low market capitalization and active market players enhance volatility, making margin trading difficult. The Open Leverage protocol acknowledges this issue and attempts to address it by using risk isolation lending pools. Lenders who take on greater risk are rewarded with higher interest rates.
Because Open Leverage is a decentralized platform, everyone in the community will have a voice in what markets are created and which trading pairings are added. After selecting a few risk conditions, anybody may start a lending pool. The governance mechanism, which is driven by the native token, OLE, will decide on its approval. Apart from traders, there are two more key market participants: lenders and liquidators, who work to ensure that all users have a smooth trading experience.
Based on the risk-reward ratio, lenders may pick which LPs to fund. They may also earn OLE tokens and other rewards by engaging in a variety of incentive schemes. Liquidators, for example, may be rewarded for correctly activating liquidations. When the collateral is insufficient to keep the transaction afloat, the deal must be liquidated.
What Is Open Leverage and How Does It Work?
Capital providers, borrowers, DEXs, and separate interest rate markets are all involved in the inner workings of this protocol.
It all begins with the establishment of a margin market. In less than 30 seconds, one may build a new market with particular or many trading pairings using Open Leverage. This market now requires liquidity in order for traders to margin trade. This is when lenders enter the picture. Lenders may earn interest by supplying stablecoins or direct assets to the pool. One may, for example, deposit USDT and get a consistent yearly return.
Lenders acquire LToken, an interest-bearing Open Leverage protocol token, after putting funds into an isolated interest rate market. They may re-stake in other yield schemes with these tokens. As a result, lenders receive exposure to developing tokens while also increasing their total return.
The Open Leverage protocol employs its smart contracts to automatically execute purchase orders of a certain token once the needed capital is available in the interest rate market. We are margin trading on FTM/ETH pairings, for example. The acquired ETH will be used by the smart contracts to purchase FTM straight from DEXs like Uniswap. Because Open Leverage uses OnDemand Oracles, there will be no pricing manipulation, regardless of the size of the loan pool.
Open Leverage Docs is the source.
The Founders
Open Leverage was conceived by people with extensive experience in both conventional banking and the crypto business. Risk management, derivatives trading, and blockchain-based financial systems are all areas where the founding team has extensive expertise.
They sought to enhance the user experience by providing a platform for traders to trade whatever token they wanted without having to obtain permission. That’s when they came up with the idea of leveraging aggregated DEXs and margin trading protocols to make modest projects more accessible to the general public.
Analysis of Competitors
Everyone in the cryptocurrency sector wants to improve their capital efficiency and boost their profits. While many protocols do a good job of making it easier and giving traders with the tools they need, they don’t always provide traders the opportunity to experiment with new tokens in other market sectors. This is an area where Open Leverage may shine.
The Open Leverage protocol gives investors and active traders a lot of trading options since anybody may build markets and generate liquidity without seeking permission. Furthermore, it rewards lenders and other network members using DeFi staking principles. Even though we are still in the early phases of development, we can anticipate Open Leverage to make a significant impact in margin trading by spawning new markets.
Tokenomics
Open Leverage’s tokenomics feature sets it apart from other margin trading systems. OLE tokens have a one-billion-token supply. And of that, 55 percent is set aside for members of the community. These tokens aren’t only for remuneration. They also help with margin trading, market development, and financing, which helps to feed the protocol ecology. Members of the community may even apply for grants using OLE tokens to generate funds.
By lending and forcing liquidations, market players may mine fresh $OLE. Revenue-sharing initiatives will also be adequately compensated. Staked $OLE holders get 46.6 percent of the money generated by lending pools thanks to the Open Leverage protocol.
Investor Information
The margin trading platform has raised $1.8 million in its first seed round of funding. The Open Leverage protocol was also highly appreciated by the community. Signum Capital and LD Capital are the primary investors in this round. Apart from these two, a number of notable investors, including FBG Capital, IBC Capital, Continue Capital, and the YBB Foundation, contributed financially.
Recent Developments
Since the initial round of funding, Open Leverage has achieved amazing development. Their protocol was just released on the Ethereum mainnet. The team is working closely with early adopters and community members to resolve UI bugs and improve the overall experience. More than 58,000 unique addresses used the testnet, which processed approximately 180,000 transactions across 260+ marketplaces. They’ve also linked up with EPNS to give real-time updates on price changes and liquidations.
The protocol has successfully incorporated Uniswap V2 and V3 with the introduction of mainnet. The team hopes to reduce costs and eliminate access hurdles for users in the future. As a result, Open Leverage solutions will be implemented on EVM compliant chains like Avalanche and Polygon. There’s also hope that Arbitrum will be included in the plan.
Roadmap
The protocol’s next aim is to promote native token use across markets and governance now that the Uniswap models have been included. The team also intends to investigate numerous extensions to the margin trading protocol in 2022. Social trading, NFTs with vaults, and limit orders are just a few options.
Open Leverage promises to provide a good user experience by expanding the infrastructure of margin trading marketplaces while developing a new range of solutions. The ultimate objective is to encourage institutional and individual investors to utilize crypto securities and derivatives trading.
Conclusion
In crypto, there is a huge market potential for margin trading. Many traders investing in fledgling ventures need a protocol like Open Leverage to suit their needs. The coins are not being distributed properly via centralized exchanges, and the accessibility issue is being addressed. With Open Leverage, we don’t have to be concerned about any of these difficulties. We will see more individuals use Open Leverage for their margin transactions as it reclaims control and lets traders to access small-cap tokens. Given the community’s growth and Open Leverage’s completed milestones, there’s little question they’ll have a significant influence on Defi in the future years.
Karthikeya Gutta, a crypto writer and freelance contributor for ItsBlockchain, was born and raised in India. With in-depth analysis and research, he covers many facets of the sector. His enthusiasm for blockchain and the crypto ecosystem stems from his belief that it has the potential to transform the world and benefit millions of people.
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The “crypto leverage trading explained” is a new age margin trading protocol for all crypto tokens. The Open Leverage platform allows traders to trade in leveraged contracts with up to 30x the Bitcoin, Ethereum and Litecoin. The platform also has an open API that allows users to create their own customized contracts.
Frequently Asked Questions
What is leverage in trading crypto?
A: Leverage is the use of borrowed funds to control capital. For example, if a trader has $1 million in his account and he borrows another $500,000 from an investor that would give him total leverage of 1.5x
How much can you lose leverage trading crypto?
A: A lot. You can lose up to 90% of the investment you make on a single trade, its not uncommon for traders to experience losses this large. Leverage trading is risky and should only be done by those that have significant investing knowledge or experience with using leverage before.
Can you use margin on crypto?
A: On the latest version of excel, you can use either your left or right margin on a cell.
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