Amplify and Margin Trade
To cater to the needs of traders, Fringe v2 introduced two leveraged trading facilities:
Fringe Amplify: Fringe Amplify is a leveraged trading facility to allow traders to gain leveraged long exposure to an asset in relation to its USD price.
Fringe Margin Trade: Fringe Margin Trade is a leveraged trading facility to allow traders to gain leveraged exposure to an asset pair.
Benefits for traders using Fringe's leveraged trading facilities:
Lower entry and exit costs for traders: Fringe Finance's Amplify and Margin Trade leveraged trading facilities employ spot markets to establish and exit trading positions. This is as compared with many other margin trading platforms that use internal markets to establish and exit trading positions. Fringe's approach of using external spot markets enjoys the typically higher liquidity of such external markets which will generally result in less price impact for traders as they enter and exit positions.
Higher protections for traders against market manipulations: Fringe's Amplify and Margin Trade leveraged trading facilities employ our new price oracle model which is central to our core lending platform and provides added protections against market manipulation attacks. This protects traders from potential costs from their positions being partially liquidated due to market manipulation attacks.
Lower costs in the event of liquidations: Fringe's new partial liquidation model minimizes costs for traders in that only partial liquidations are undertaken as needed. This not only results in lower liquidation costs for traders given liquidation fees are only paid on the smaller partial liquidation, but will typically result in the trader still retaining some/most of the position aligned with their original trading intent.
Margin Trade
Fringe Margin Trade is a leveraged trading facility to allow traders to gain leveraged exposure to an asset pair.
Margin Trade will provide users with the flexibility to choose their own pair of assets to trade against, rather than just trading against the US dollar. This will allow traders to select the base or “quote” asset of their choice, expanding the range of available trading options.
A trader selects a pair of assets, one to ‘go long’ and the other to ‘go short’. The trader also specifies their desired exposure to the asset pair. Fringe Margin Trade will specify the margin the trader needs to deposit for the trading position.
While the position is open, interest is charged on the exposure amount.
If the trading position falls into a liquidatable state, liquidators will partially liquidate the position to bring it back into a healthy state. The trader’s position will still be maintained, though now partially liquidated.
The user experience for Margin Trade differs slightly from that of Amplify (see below), as users can select the assets they want to trade and adjust the parameters of the trade, including the degree of exposure they wish to gain. This is a crucial addition to the Fringe ecosystem, as it will attract traders looking to maximize their returns in the assets they’re most interested in without using centralized platforms, expanding Fringe’s user base.
Fringe has prepared a brief YouTube video to present the Margin Trade facility.
Amplify
Fringe Amplify, on the other hand, is a leveraged trading facility to allow traders to gain leveraged long exposure to an asset in relation to its USD price.
Amplify will allow users to magnify their exposure to a specific asset by taking a leveraged long position. This means that anyone can put down a deposit and receive amplified exposure to the asset they choose to trade, in this case, in relation to its US dollar value.
A trader selects an asset, then specifies a margin amount and a multiplier. Fringe Amplify then creates a leveraged trading position of the selected asset to the value of the margin amount times the multiplier.
While the position is open, interest is charged on the margin amount times the multiplier.
If the trading position falls into a liquidatable state, liquidators will partially liquidate the position to bring it back into a healthy state. The trader’s position will still be maintained, though now partially liquidated.
With the use of loan-to-value ratios, traders can potentially multiply their exposure and amplify any gains resulting from the market moving in their favor.
However, it’s important to note that traders should be aware of the added exposure if the market moves against their position and understand the risks associated with taking leveraged positions.
Both features will offer robust security measures to protect users’ assets and provide a seamless trading experience.
Fringe has prepared a brief Youtube video to present the Amplify leveraged trading facility.
User notes for Amplify and Margin Trade
The Open Position button is not enabled.
This can occur in the following circumstances:
when there is not sufficient capital in the Fringe lending pool of the short asset of the trade for the trade's exposure amount specified by the user.
when there is insufficient liquidity in the external DEX markets to conduct the atomic swap of short asset for the long asset for the trade's exposure amount specified by the user.
When fully or partially closing a trading position, "Repay using collateral" shows that I will experience undesirably high price impact.
The price impact is a function of the liquidity of the external DEX markets. If liquidity is low, the price impact will be high.
In this event, you have the option of partially or fully closing the position using the short asset from your wallet. You will need have that asset on hand to perform this action.
When I go to close a Margin Trade position, the popup modal does not present the option to Repay Using Collateral.
This can occur when the DEX trading path for the long/short asset pair is not viable or cannot be found by the external DEX aggregator.
In this event, you can still close the position by repaying the short asset from your external wallet.
The long (collateral) asset will remain in your Fringe collateral deposits.
Note the image - no option to Repay Using Collateral.
In Margin Trade, how do I open multiple positions with the same long asset?
With Fringe V2, this cannot be done. (But this will be possible on Fringe V3.)
Fringe V2 employs a model whereby only one short position can be opened for any collateral asset (the collateral is the long side of the position.)
This is because Fringe V2 expressly ties a 'loan' (i.e. short position) to a specific collateral asset deposit (i.e. long side of the position)
It will be possible in Fringe V3 to open an arbitrary number of positions that have the same long asset, because Fringe V3 employs the notion of pooled collateral. Pooled collateral is, er, pooled and acts as overall collateral that can be used to raise any set of trading and loan positions.
A note when opening trading positions: You will sometimes need to enable each token subject to the trade.
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