It’s Here! Binance Rolls Out New Margin Trading Platform: Full Details
Cryptocurrency traders, welcome to Binance 2.0.
On July 11th, the Malta-based global cryptocurrency exchange giant announced the launch of its new Margin Trading platform, which will allow the company’s users to put down crypto collateral on Binance.com in order to borrow funds and make leveraged long or short trades.
The move comes after the exchange’s leadership confirmed back in May such a service was coming.
The margin capabilities have already been trialed by a small lot of users, with the Thursday roll out now making the service available to anyone in permitted jurisdictions that have verified I.D. on Binance.com.
Switch Between Two Trading Systems with Ease
The new service will be available right from the main Binance Exchange page through a “Margin” tab.
Both the exchange and margin interfaces have been optimized and underpinned by a new “advanced trading engine for better order matching and press indexes for margin level calculations to enable lower liquidations,” the company noted in their announcement.
On the news, Binance chief operating officier and co-founder Changpeng Zhao said the pivot was part of the exchange brand’s wider strategy to become a one-stop shop for all things cryptocurrency, commenting:
“This is another step in providing an inclusive cryptocurrency trading platform catering to the needs of both advanced institutional traders and retail traders under the same roof. We are providing a new tool in the financial services and cryptocurrency markets to help amplify trading results of successful trades.”
Of course, the new platform will come with the heightened risks associated with margin trading, but the exchange will rely on clear disclaimers, a margin risk dashboard tracker, and informational guides to help users understand the implications.
As Binance co-founder Yi He explained, margin trading was one of the exchange’s “most requested services,” so the company has committed to delivering that service responsibly:
“Though the current cryptocurrency market and legacy platforms for margin trading poses greater risks and benefits at the same time, we are confident that its development coupled with more knowledge on proper risk management will help realize greater benefits in the long run.”
What Will the Process Be?
To onboard, users will go to their account dashboard and click the “Open margin account” tab. After clicking through a risk reminder and Terms and Conditions, traders can start moving cryptocurrency from their exchange wallet to a new Margin Trading Wallet — no transaction fees required.
At this point, the leveraged trades can begin, per the Binance Academy margin trading info portal:
“After transferring BNB coins to your Margin Wallet, you will be able to use those coins as collateral to borrow funds. Your Margin Wallet balance determines the amount of funds you can borrow, following a fixed rate of 3:1 (3x). So if you have 1 BTC, you can borrow 2 more. In this example, we will borrow 0.02 BTC.”
With such borrowed funds, users can trade on the Margin Trading platform but will need to closely monitor the risk level of their margin positions to avoid liquidation. They can repay the borrowed funds plus interest whenever they are ready through their account’s “Borrow/Repay” tab.
Things Are Getting Busy for Binance
The margin trading service comes on the heels of CEO Zhao revealing earlier this month that the exchange was also in the middle of developing a cryptocurrency futures platform.
At the time, Zhao said there wasn’t a set date for the service’s release, only that a “test version will be live in a few weeks.”
The pivots toward new kinds of cryptocurrency services will likely bolster Binance’s already booming volume for the forseeable future. In June 2019, the exchange reported the highest single-month trade volume yet in its history, having facilitated $67 billion USD to start the summer.
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William M. Peaster, Khareem Sudlow