Leverage trading, also known as margin trading, revolutionized the trading industry from its inception as it allowed traders to collect massive rewards – much larger than they could afford. earn with the only value of their account. However, the trick is that this can only happen for seasoned traders who know what they are doing, and anyone else who trades with leverage is likely to lose their money and allow the platform to benefit from it.
This is because trading on margin comes with huge risks, and you really need to know what you are doing to achieve it. But if you do, it’s totally worth it.
Leverage trading has also become possible in the crypto industry, relatively quickly after the industry began to gain the attention of people who weren’t intimidated by its technology at first. However, one of the problems with the crypto industry is that trading is still mostly done on centralized exchanges. With the industry’s focus being as decentralized as possible, it didn’t fit into a larger narrative.
Decentralized exchanges appeared after a while, but they had low liquidity, poor technology, and they did not generate interest. Until last year, at least, when the DeFi industry emerged, launching DEX and all other decentralized projects meant more than just basic crypto trading higher than anyone would ever believe.
And it continues to grow. This is why Degen Protocol – a protocol that finally found a way to bring decentralized margin trading to crypto – chose perfect timing to emerge, and why it is going so big right now.
What is the Degen protocol?
Let’s start from the beginning. Degen protocol is a decentralized protocol that brings margin trading to DeFi. The protocol is highly customizable, allowing traders to choose anything from leverage and pairs to cash pools and more. As of mid-March 2021, the protocol is present on both the Ethereum blockchain and Binance Smart Chain.
The way it works is also very interesting, as it offers four roles that protocol users can fulfill. Users can be pool builders, lenders, bettors, or traders.
How it works?
Pool creators, as their name suggests, have the ability to create pools. They are generally considered to be crypto enthusiasts and token owners who can add any pool of trading pairs to Degen and promote it to other participants. Pool creators can customize various pool settings including creator and lender fees, leverage, maximum pool usage, lenders daily interest, and more.
Then there are the stakers, which are basically crypto owners who want to earn more crypto using the crypto, without losing the coins they already have. Staking is therefore a perfect solution for them, as it requires them to lock their coins and receive new ones as rewards from the system. Meanwhile, they also play a role in the governance of the project and make profits on the platform trades, so being an actor seems to be one of the best roles in the project ecosystem.
Then there are the lenders, whose role is similar to that of punters. These are also people who do not wish to trade their coins and risk them in a highly speculative market, but rather want to receive rewards without exposing themselves to risk. The coins they provide are used by the pools for transactions and subsequently receive a fee for each pool transaction.
And, of course, there are traders. Traders are the last piece of the puzzle, but their role is just as crucial as any other, as they are the driving force behind the rest of the well-oiled machine for which the Degen Protocol was created. They use tokens in the pools, try to make a profit, and then put them back into the pool afterwards. They also conduct transactions and pay fees which are used to pay lenders and bettors. So while other roles set the stage, it is the traders who feed the whole system.
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