A Guide to Trading Stocks Using Crypto

Published in

Coinmonks

8 min readAug 30, 2021

Morpher DEX Trade and Invest on Ethereum

There has been a lot of excitement about the returns you can get in DeFi in comparison to traditional assets, but what if you could combine both to maximize returns? The potential is huge. Apple stock is up 29% in the last 12 months, Tesla 76%. With synthetic asset protocols offering very few markets and struggling to implement more complex trading features such as going short and using leverage, Morpher DEX is a great alternative for those in the DeFi community seeking to maximize their gains.

This tactic will teach you how to use Morpher DEX to trade over 700 assets on the Ethereum blockchain including stocks, commodities, currencies and other crypto.

Goal: Trade traditional assets with crypto
Skill: Basic / Intermediate
Effort: 10–15 mins
ROI: Over 20% per year depending on performance

Background on Morpher DEX

Morpher DEX gives users exposure to different assets without the need to hold or own the underlying asset. For example, someone that trades Apple stocks on Morpher DEX can profit from a change in the price of that stock without having to actually own it. Users can go long or short with up to 10x leverage and only have to pay Ethereum gas fees. Unlike other synthetic asset protocols, there is no need for collateral on Morpher. Here are some of its key features:

Perfect liquidity
Unlimited markets
No counter-party

Morpher DEX was created by Morpher Labs, a company seeking to democratize trading and investing and is backed by US billionaire Tim Draper. Its protocol started being built in 2018, has over 40,000 monthly active users worldwide and executes thousands of trades every day. You can learn more about the Morpher Protocol in its white paper.

How Morpher Works

Morpher is powered by a set of smart contracts built on Ethereum. These smart contracts act as the counterparty to all trades, while the MPH token acts as the settlement currency. First, Users select a market they wish to stake their tokens to. Should their position earn a profit, the smart contract mints a proportional amount of tokens in return. If the user realizes a loss, the contract destroys a proportional amount of staked tokens. So if you buy 100 MPH tokens and invest in Apple stocks, if the price of Apple goes up 10 percent, you receive 110 tokes back. If the price of Apple stock goes down 10 percent, you receive 90 MPH back.

What makes the Morpher protocol unique is that, when you trade, you are not really buying from or selling to another person. What you are doing is interacting with a smart contract. It’s like trading directly with a central bank that increases or decreases money supply according to the performance of the markets you are trading. And there over 700 different assets users can choose from including stocks, commodities, currencies and other crypto.

Fixing Trading And Investing for Good

There are two things that hold trading back: the need for a counterparty and the need to own the underlying asset. These characteristics cause liquidity problems, make shorting markets too complicated and lead to slippage (the price of assets is different than intended). Both centralized and decentralized exchanges suffer from most of these limitations, so do synthetic asset protocols.

By giving users a smart contract as a counterparty, Morpher fixes trading and investing for good. Morpher DEX has perfect liquidity, so every trade gets filled immediately independent of its size or direction. There is no need to wait for a counterparty and there is zero slippage. You get any asset at the current market price, regardless of how much of it you want to buy or sell. This also makes using leverage and shorting extremely easy. These critical trading features are just parameters in the Morpher smart contracts.

The smart contract also gives Morpher the possibility of unlimited markets because the protocol only needs a reliable data feed to create a market. That is how Morpher already offers more than 700 markets and keeps adding more (that’s 10 to 20 times more than offered by other synthetic asset protocols). There is also a huge variety of markets Morpher would be technically able to support, from weed spot price to NYC real estate or even corporate fundamentals. The ability to support markets that cannot exist in traditional finance is something the platform has not yet begun to explore but will in the future.

How to Start Trading With Morpher DEX

Step By Step Guide

Let’s walk through the steps you need to take so you can trade on Morpher DEX.

Start by going to morpher.com/dex where you can find the interface to interact with the Morpher Protocol on the Ethereum mainnet. Agree to the privacy policy and the terms of use, and then connect your wallet.

Now you are ready to start trading. Select one of over 700 markets you can trade. Let’s say you want to invest in the S&P 500, which is a market capitalization index of the 500 largest publicly traded companies in the US. All you have to do is select it on the list, as you can see in the image below.

Then select the amount of crypto you want to stake. So let’s say you want to swap 0.5 ETH to S&P500 with a leverage of two, as in the image below. Then, all you need to do is click the “morph” button.

This brings up the “confirm trade” interface, where you need to take two steps in order to complete the trade. The first is to swap your ETH to MPH token. Clicking “swap” will bring up your wallet and ask you to confirm the transaction.

Then click “trade” and confirm the transaction in your wallet, where you will be able find a link to the transaction on Etherscan. Etherscan functions as a public directory for all transactions on the Ethereum blockchain.

Once the order is done and the callback from the oracle (the software that gets the asset price) is concluded, the staked position will appear on the screen. There, you will be able to see all the details of the position and also close it.

To close a position, click “close position”, then click “unmorph now”, and confirm the transaction in your wallet.

That’s it! Now that the transaction is complete, you will get the MPH tokens from your trade. If you want to swap them back to ETH or any other currency, all you have to do is go to an exchange like Uniswap.

Morpher DEX Also Offers Staking

Staking is a way to earn a guaranteed return on MPH tokens that are not being invested in markets. It’s like a virtual savings account that pays out in crypto. On Morpher DEX, all staked MPH is credited with 0.015% more tokens each day. The earnings are non-compounding resulting in a yearly gain of 5.48%. Staking rewards are minted daily as part of Morpher’s inflationary tokenomics.

When you stake your MPH tokens, you have to wait 30 days after staking before you can withdraw. Every time you stake the 30 day time lockup is applied to your funds again. The rewards do not increase your initial stake (non-compounding). Earnings are paid out in MPH when you unstake and redeem.

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