Binance, the leading decentralized exchange from the crypto space, has recently announced the launch of a crypto margin trading platform in its blog.
The exchange is on the road to become the biggest exchange of the crypto space as it has been introducing multiple opportunities for institutional and retail investors to enter into the space by easing down the investment options for them, with margin trading being the latest one.
The announcement was enough to garner the attention of a large number of investors who opened accounts for margin trading on the same day the announcement was made. The detailed statistics were stated in a tweet by the CEO of the exchange, CZ:
Over 10,000+ margin accounts have been enabled since the announcement this morning. Combined they have borrowed over $15,000,000 so far. https://t.co/SbsDtYimKK
— CZ Binance (@cz_binance) July 11, 2019
Margin trading is a common concept of financial markets where an individual is given the opportunity to buy assets more than they can afford. This way, higher returns can be guaranteed as the initial amount is elevated. The extra amount is borrowed from the broker which in this case is Binance.
The principle, however, is that a basic amount is to be deposited on which the broker lends the trader a multiple of the basic amount which is decided according to the regulations. In simple terms, this is a loan from the broker which is to be paid back with interest depending on the returns. Binance is calling this platform as Binance 2.0. It also allow the transfer of funds from its margin trading wallet to exchange’s wallet, without any transaction fee.
By enhancing gains through a borrowing process, Binance is opening crypto to more retail and institutional investors by attacking their interests of extra gains. The CEO of Binance, CZ (Changpeng Zhao), stated:
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.
The only downside to this kind of trading is that it is subjected to high-level risks where even if an individual loses money, they are supposed to return the specified borrowed amount to the broker. Yi He, co-founder of Binance, addressed the problem of high-level risk in the blog, stating:
“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.”
Binance has been way ahead in bringing innovation to the crypto space while attracting masses for better adoption. The exchange recently contributed to the crypto space to bring in the interest of people by the introduction of futures trading on the platform. Apart from this, it has also opened a new platform specifically for users in the US in partnership with BAM, the US-based trading service.
Apart from hitting the news on expanding the platform with new innovations and bringing financial market concepts to crypto, Binance has also successfully made its own token, BTCB, for its decentralized exchange, which is pegged to Bitcoin.
The exchange has also announced that this open doors for many more tokens to come which would be pegged to the biggest and most prominent cryptos. The platform ensured that its tokens will always maintain 1:1 peg with the currencies and would enhance features using the native blockchain of Binance. With all these advancements, it can be safely said that Binance would very soon reach the top because of its contribution towards crypto adoption.