Long/Short Margin Trading

What is Long/Short Margin Trading?

Meshswap's margin trading is a service that allows users to open long/short positions on the on-chain using leverage. Based on the assets they deposit, users can open long or short positions no less than three times for a specific token, and can profit by the difference between asset price at position opening and asset price at profit realization. Moreover, depositors can actively respond to market volatility even in an on-chain environment, since short positions can continuously pursue profits even in declining markets.

Furthermore, Meshswap's margin trading provides secure account management and high profitability by depositing both assets deposited by users and assets acquired by opening each position into a lending pool, thus acquiring additional deposit interest and MESH reward, the deposit boasts high profitability and safe account management.

Features of Long/Short Margin Trading

  • Opening Positions Based on Stable Assets Only stable tokens such as USDC, USDT, BUSD and DAI can be used to open long/short position on Meshswap. Depending on the dollar conversion value of the stable token deposited by the user, the position can be opened up to three times to generate stable profit.

  • User’s Asset Portfolio Diversification Users can also open long/short positions on the chain based on a lending pool of Meshswap to diversify their digital asset portfolio and gain new profits.

  • Safe Asset Management &Return Maximization The assets deposited by users are deposited in a lending pool to receive interest on deposits and receive MESH rewards. This allows users to manage assets safely and maximize returns.

Debt Ratio Management

An asset debt ratio is defined as the ratio of users’ borrowed assets to their total deposited assets. For safe asset management, users should make sure that the debt ratio does not exceed 90% when using long/short margin trading. In case this ratio is exceeded, returning the assets to be returned (borrowed assets) may be difficult if their prices change sharply. Therefore, when the debt ratio exceeds 90%, users’ deposited assets are automatically returned, and the remaining assets are available for withdrawal after the return is completed, excluding the 20% return fee.

In order to prevent liquidations, users have to 1) add deposit assets in '0x' state or 2) return some of the assets they are using, and ensure that the debt ratio does not exceed 90%.

Management of debt ratios and liquidations is necessary for securing protocol stability and ensuring smooth asset usage for long/short margin traders. The stable return on assets in a lending pool helps traders have faith in the system, which would in turn lead to more deposits, which would enable the supply of lending pool assets to increase.

Last updated