Arbitrage on KuCoin: Borrow ATOM on Margin Trading + Lockup ATOM on Pool-X
As the title may seem a little bit confusing, this is something possible to be determined and take advantage in a form of arbitrage at some sort.
Personally speaking, at first I was amongst the confused category of people on the concept of cryptocurrency. But with a long and painful amount of research, I finally got the gist with a little bit of tricks to this modern yet not-so-modern concept, which I am going to share in this article. But before all the hype gets a toll on you, let’s just clear to whom this may benefit?
To put it simply, this is for users who want to hold and maintain the value of their coins (like participating in staking mining) instead of trading them. While such inevitable concerns linger around the locked-up coins being in a fast paced environment like cryptocurrencies, there are some alternatives to avoid forfeiting control of your assets.
While this may not sound exactly the greatest strategy as the word “Margin Trading” inflicts, perhaps, this may be beneficial for traders who wants to yield maximum profits. This is probably riskier than most of the other strategies, so make sure you read through the terms and understand your plan.
To start the process:
1. You must transfer coins (such as USDT) to your Margin account on KuCoin (which is needed in this process if you have an account)
2. Next, borrow the lock-up coin ATOM, which is supported on Pool-X, and make sure to keep the debt ratio lower than 60%.
3. Transfer the borrowed ATOM from your Margin account to your Main account. From there, transfer the ATOM to your Pool-X staking account.
4. Then, go to Pool-X. Login your KuCoin account on Pool-X then buy ATOM-Flexible on the liquidity trading market or directly stake the flexible product “ATOM-Flexible” on the Staking page.
5. You will now start obtaining the double rewards earned by staking on Pool-X, including both the staking rewards and mining rewards.
What are the benefits?
1. If the staking rewards of ATOM with 12% APR minus the borrowed interest is positive, you make a profit. There is currently an activity running on KuCoin where you can borrow any crypto (excluding USDT) on KuCoin Margin trading and get a daily interest rate of 0, meaning profit will be higher during the activity.
2. Additional POL can be obtained by staking on Pool-X.
What are the inherent risks?
1. Margin trading is high risk and can lead to a loss of money. For example, if the price of the locked ATOM suddenly increased tenfold, you would lose out. However, you can control the risk rate by observing it in real-time.
2. If the staking rewards of ATOM with 12% APR minus the borrowed interest is negative, you will face a loss. However, due to the zero-interest borrowing activity currently running on KuCoin Margin trading, there will be no loss during the activity.
This article is a personal guide and you should DYOR. While there are such risks involved but they are worth giving a shot. I do not force or recommend any user to invest in any ICO or any investment website at all. I’m just a friendly user who seeks to maximize profit. Thank you.
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