Leveraging Money Markets

On-Chain Margin Trading — A Market Overview

Margin trading has been the hallmark of a successful trader on the bourses for a long time now. Considered to be a major innovation of the derivatives industry, margin or leveraged trading exposes traders to opportunities unavailable in other forms of trade.

Margin accounts, compared to regular trading ones, allow traders to access greater sums of capital provided by an intermediate, enabling them to leverage their trade positions, which can essentially, amplify their trading results so that traders can realize bigger profits on successful trades.

It however, comes with its own set of challenges and opportunities. Making money, overcoming a capital limitation, is an acquired skill, and needs a thorough understanding of the market and a solid risk appetite. Trading crypto with margin requires experience and knowledge about how such markets operate.

Leverage Trade Markets

The crypto asset markets have had their own share of margin trades for the past couple of years — this amounts to the tune of almost USD $250 Billion in daily trades in over 40 of the world’s top crypto centralized exchanges. Extrapolating this gives us an annual derivatives market of USD $87 Trillion!

Leverage conferred by margin using borrowed funds defines the underlying need for capital for the industry.

The above volume supports the fact that there is an inherent need for capital for leveraging the markets. While the margin markets on CEXs thrive, there is little or no leveraging happening on the decentralized exchanges or DEXs as we know them.

Total Addressable Market

The total transaction volume on decentralized exchanges crossed over 2 trillion USD as per data from ‘The Block Research’, a massive 858% increase has been seen from the previous year. This with over 5 million unique trading addresses involved in daily trading on some of the largest DEXs such as Uniswap, Curve, DODO, QuickSwap, PancakeSwap and more.

This also calls for better utilization of the assets on AMMs. With this huge capital on DEXs, the potential to fund the DEX based Margin trade market is huge.

Money Markets & Efficiencies

The DeFi lending industry has been grappling with various ideas to make DeFi money markets more efficient and provide a wide range of lending products with a chain agnostic infrastructure and drive liquidity across chains to fund the ever-increasing demand on our lending protocol.

If the trends are to be believed, on-chain margin trading — one that enables traders to long or short trading pairs on DEXs directly, efficiently and securely — should play a big role in driving utility for the unused liquidity in the DeFi space…

More on this later — as we explore this space as we move forward…

About EasyFi

EasyFi Network is a universal layer-2 multi-chain money market protocol for digital assets with focus on liquidity sourcing & capital efficiency for structured lending in a non-custodial manner. The Protocol is currently live on Polygon, Binance Smart Chain and Ethereum.

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