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Unleashing Liquidity in DeFi Trading
Centralized exchanges (CEXs) have created opportunities for users to trade, buy and sell digital assets, but there are still thousands of tokens on a variety of blockchains that cannot be used as margin for hedging, trading or speculation.
Moreover, leveraged trading on existing permissioned CEXs has substantial barriers to entry and is costly to operate and maintain. At the same time, decentralized exchanges (DEXs) for leveraged trading are permissioned and only provide limited choices for asset pairs.
As more people adopt crypto as part of their personal investment portfolios, it’s crucial to enable wider usage of more tokens. As we take this important step, a wave of liquidity will be unleashed into the crypto markets.
The infrastructure for a true permissionless margin trading market would allow anyone to create markets. This would give any decentralized finance (DeFi) user the power to define a margin trading market for a token pair with isolated and market-adjusted risk controls, while others lend and borrow cryptocurrency for their own trading objectives.
That’s precisely what OpenLeverage has built: a permissionless lending and margin trading protocol that allows users to create unique trading opportunities that serve unmet needs within the DeFi community. With the protocol, anyone can create a margin trading market as easily as creating a liquidity pool on any platform, and it allows users to hold long or short positions for hundreds, if not thousands, of tokens.
The key design elements of OpenLeverage include:
Using either token from any pair to borrow more assets for margin trades;
Integrating and trading with liquidity pools from DEXs like Uniswap to enhance volume;
An incentive program for liquidity providers of supported trading pairs on DEXs, encouraging deeper liquidity and helping traders limit slippage;
Risk-isolated pools according to pairs’ volatility and calculated risks, with prices directly referencing real-time data from DEXs;
OnDemand Oracle, a mechanism that detects unreasonable price spikes to counter price manipulation;
Insurance accumulated from transaction fees and interest earned that can compensate lenders if an insolvency event occurs;
New projects that can create lending pools with a single on-chain transaction to support margin trading from day one of launch, which is not currently possible on other platforms, enabling open integration with other DeFi projects technically and through their tokenomics.
A clear vision from the start
OpenLeverage Protocol was launched on Ethereum mainnet on Dec. 20, 2021, integrating with Uniswap V2 and V3. OpenLeverage will have multichain deployment in three to six months, connecting top AMM DEXs on several blockchains, including Binance Smart Chain, Avalanche, Polygon and Solana (via Neon Lab), plus layer 2 solutions such as Arbitrum and Optimism.
Prior to its mainnet launch, OpenLeverage conducted a successful testnet trial from August to December 2021, which saw over 37,000 unique addresses access our testnet, with over 123,000 on-chain transactions processed from 260 markets and more than 28,000 positions.
Upcoming plans
OpenLeverage’s native OLE token and its decentralized autonomous organization (DAO) will also be launched to boost protocol usage with decentralized governance. There are further planned extensions and enhancements to the protocol, with priorities including social trading, tranche lending with smart vaults and limit orders for margin trading.
OpenLeverage provides a permissionless, decentralized, scalable and secure leveraged trading facility that serves the hypertrophic DeFi market’s long tail. The decentralized exchange market is growing rapidly – the current cumulative DEX trading daily volume, on average, is over $3 billion, and there are more than 3 million unique traders. Allowing as many tokens as possible to be used as margin for hedging and speculation will exponentially increase the overall liquidity of the decentralized market and move DeFi into a more mature stage.