Decentralized Crypto Exchange Dolomite to Introduce Margin Trading with SL Orders
Dolomite, a non-custodial decentralized cryptocurrency exchange, has announced its intention to launch margin trading platform with stop-loss orders.
Furthermore, the crypto focused startup firm has stated that the margin trading platform will be developed using dYdX protocol. The existing decentralized exchange is based on Loopring protocol.
The users of margin trading platform will be allowed to open long positions with leverage of up to five times and short positions with leverage of up to four times the value of holdings in their wallets.
The firm also claimed that it is the first decentralized exchange to offer leverage trading:
“Dolomite will also be one of the first decentralized exchanges to offer leveraged limit order trades, allowing a leveraged trade to fill only at a certain price. Dolomite is building off of the dYdX margin lending protocol, giving it access to over $30 million in lending liquidity.”
Corey Caplan, co-founder and CEO of Dolomite, elaborated that dYdX protocol permits the platform to “seamlessly work with any exchange to open and close positions” and is structured in a modular manner. He asserted that such a structure offers multiple benefits to platforms:
“This allows Dolomite to capture the trade volume from users opening/closing positions. Users are also able to maintain a lower collateralization in comparison with other margin lending protocols, so users can trade with more leverage.”
Caplan also pointed out that Dolomite platform is the first to merge with dYdX. Finally, he clarified that the limit orders to be provided by DEX is because of the modular structure of the protocol.
“Dolomite is also uniquely offering Margin Protection which is a stop-loss function that will close your positions on Dolomite before they are liquidated by dYdX. This saves users from losing the entirety of their margin deposit when they open a position. We were only able to add this feature in because of the modularity of their protocol.”
Caplan also acknowledged that he doesn’t have any idea about the partnership between dXdY and decentralized stablecoin DAI (and also the decentralized autonomous body, MakerDAO, backing it). Nevertheless, he believes that the two systems are working together.
“We’re unsure of their relationship. However it’s likely good considering they are one of the biggest lending protocols surrounding DAI in the ecosystem. DAI is also central to dYdX’s lending liquidity and trade volume.”
Notably, late last month, entrepreneur, crypto enthusiast and controversial tech player John McAfee has spoken in favor of stablecoins for DEX adoption.