Uniswap, the Ethereum-based decentralized platform has created a major uproar in the DeFi market ever since it has announced its governance token UNI. Today, a popular exchange, Bitfinex has announced margin trading support for Uniswap (UNI) with two Uniswap Pairs UNI/USD and UNI/USDT.
Margin trading is an old practice of trading in which traders can borrow additional funds to increase leverage. Bitfinex has announced that the decided trading pairs will be available for margin trading with a maximum leverage of 3.3x. In this case, the traders have to deposit initial equity of 30% with a maintenance margin of 15%.
This event follows the recent listing of UNI by Bitfinex. Other major tokens listed by the exchange are LINK and ADA. UNI can also be held as collateral for margin trading with an initial haircut of 90% which is changeable with the course of time. Most commonly haircut implies the percentage difference between an asset’s market value and the amount that can be used as collateral. There is a difference between these values because of market price changes over time which the lender needs to accommodate.
Bitfinex’s announcement comes just two days after its competitor announced cross-margin trading for Uniswap tokens. Binance now allows cross margin trading facility for UNI in two trading pairs namely UNI/BTC and UNI/USDT.
Recently the decentralized exchange Uniswap has created a storm in the DeFi landscape. When SushiSwap came into the mainstream, there was a lot of migration from Uniswap to SushiSwap, but with its governance token hogging all the attention, it has emerged as one of the biggest deals in the DeFi market.
In a mere 10 day period, UNI has managed to slide up continuously dominating the DeFi charts. We reported to you that in terms of Total value locked (TVL) UNI has created a rage in the market by being the first token to have a $2 billion in TVL. UNI TVL stands at $2.13 billion which is a clear dominance of 19.40% of the market pie chart. The entire ecosystem has grown from strength to strength and it still continues to grow every passing day. Top exchanges in the circuit like Coinbase and Gemini have been quick to list UNI tokens on their platforms.
When the release of UNI tokens took place its price surged all the way to $7.12. But as is always, prices did correct itself and consolidated at levels between $4 and $5. The breakout overall has been bullish considering Coingape’s report on the UNI price pattern.
With margin trading, traders will be able to borrow funds to increase their leverage providing a greater potential for clocking better profits compared to conventional trading. But what needs to be remembered is that with high levels of rewards come higher levels of risks especially given the high volatility of digital assets.