DX.Exchange – the digital asset platform that bridges the gap between blockchain technology and the traditional financial markets, has just announced that it has launched the world’s first-ever Smart Leverage Token (SLT).
On top of its portfolio of digital stocks and ETFs that are represented by blockchain assets, the SLTs will enable investors to trade on margin via the blockchain protocol.
The SLTs will allow traders to obtain leverage on Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Cardano (ADA) and Binance Coin (BNB), all of which can be traded against USDT or DXCASH – the platform’s native utility token.
What is a Smart Leverage Token?
In a nutshell, SLTs allow everyday investors to trade cryptocurrencies on margin, without needing to go through the status quo of high borrowing costs and overly complex financial jargon.
Ordinarily, those looking to obtain leverage on their cryptocurrency trades would be required to borrow funds from the platform in question, subsequently resulting in overnight financing costs, as well as the ever-growing risks of margin call demands.
On the contrary, SLTs on the DX.Exchange does not require the investor to borrow funds, meaning that the investor never faces the risk of entering into a negative balance. Moreover, investors are not accustomed to any overnight interest charges, which is something that can very quickly eat away at potential trading profits.
How Will Smart Leverage Tokens Actually Work?
In order to offer its innovative leverage trading framework, the EU-regulated DX.Exchange functions in a different way to other cryptocurrency or CFD trading platforms.
First and foremost, the underlying price movements of the leveraged cryptocurrency pairs are based on a decentralized index model. In order to access the leveraged index, traders will be required to use the platform’s proprietary Turbo Token. This ensures that traders avoid costly financing charges, and essentially, they own their own risk, rather than being at the helm of a third party exchange.
The decentralized index will update on a second-by-second basis, based on the value of your chosen cryptocurrency against either USDT or DXCASH. For example, if you decide to trade the ETH/USDT 5x market, your Turbo Tokens will equate to 5 times the real-time second-by-second movement of ETH/USDT. Therefore, if the price of the asset goes in your favor by 0.2% in a given second, then your leveraged Turbo Tokens would go up in value by 1%
Built on top of NASDAQ’s matching engine and market surveillance technology, the decentralized indexes that facilitate the tracking of price movements are based on institutional-grade precision.
It is also worth noting that the margin trading model provided by DX.Exchange offers investors the chance to go both long and short. This ensures that skilled traders can make gains regardless of which way the market goes.
Smart Leverage Tokens – The Verdict?
In summary, the team at DX.Exchange has once again flexed their innovative muscles through their first-of-a-kind SLTs. No longer do cryptocurrency traders need to worry about frustrating margin calls or hugely expensive overnight financing costs.
By instead obtaining leverage via the DX.Exchange-backed Turbo Tokens, investors can take full control of their own risk, subsequently resulting in a seamless and cost-effective way to trade on margin.