The new platform will allow leverage in BTC, ETH, TRX, XRP and USDT. Users are able to transfer funds from their margin wallet to their primary wallet without having to pay commissions.
The largest exchange house, Binance, has launched version 2.0 of its platform, a move that officially adds leveraged trading for its clients.
The company revealed that trading with a margin wallet for its users was already on its way by the end of May 2019, and soon afterward it said that the service would work with leverages of up to 20 times (20:1) in the future.
In a release published on Tuesday, July 9th, 2019 Binance indicated that leveraged trading (the amount that can be borrowed against a user’s cryptocurrency guarantee) is of only 3 times (3:1) at that moment. According to what the company commented in a tutorial video, the balance in the margin wallet will determine the amount of funds that can be borrowed, following a fixed rate of 3:1 (3 times). For example, if a user has 1 BTC, he or she could borrow twice that amount.
It was also established that, in order to make use of this service, traders must have passed a know-your- identification (KYC) check and they must also have established the two-factor authentication as an extra layer of security.
Initially, trading with the margin wallet is available for parities such as Bitcoin (BTC), Ether (ETH), XRP, Binance coin (BNB), Tron (TRX) and Tether (USDT), but it can be financed with all currencies supported by Binance. The commissions are 0.02% in all cryptocurrencies with the exception of BNB, which maintains commissions of 0.01%.
The Co-Founder of Binance, Yi He, explained that the current market for cryptocurrencies and legacy trading platforms with leverage simultaneously establish great risks and benefits. However, they feel confident that their development, coupled with more knowledge about the proper way to manage risk, will help realize considerable long-term benefits.
Regarding version 2.0 of its platform, the exchange house indicates that, as well as having a “recently optimized interface,” it also has a new advanced operations engine aimed at improving order matching.
Moreover, the platform allows users to move funds from the margin wallet to their main/primary wallet in Binance, without being charged transaction fees. With reference to the addition of margin trading, the CEO of Binance, Changpeng Zhao explained that this is another step to provide an inclusive cryptocurrency trading platform that satisfies the needs of both advanced institutional traders and retailers under the same roof. He said that they are providing a new tool in financial services and in the cryptocurrency market in order to help improve the trading performance achieved through successful operations.
To summarize, it can be said that leverage consists of making a deposit, known as margin, to provide the users of the platform with increased exposure to an underlying crypto asset. In a few words, a fraction of the full value of the trade is placed and the provider loans the rest. The user’s total exposure compared to the margin is known as the leverage ratio.
By Willmen Blanco