IDG-backed cryptocurrency exchange KuCoin will soon launch its Margin Trading service, which allows users to amplify their trading results through borrowing “crypto valued multiplied original principal for more transaction possibilities.”
The firm said that margin trading was on the way on October 31, but didn’t reveal the exact leverage the service would feature.
Users effectively borrow cryptocurrencies, depositing their own digital assets as collateral. If their losses exceed the value of their collateral, their positions are automatically liquidated.
Through a risk management system, KuCoin can allocate different levels of risk for different tokens. The maximum leverage or initial margin requirements can be adjusted according to the token’s associated risk.
“By selling the lending crypto, users can short their positions to get profit. Margin trading, compared to traditional trading, has the potential for higher profit but, due to price fluctuations and high liquidity, also faces higher transaction risk,” it said in an official announcement.
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Not without risks, many crypto exchanges have the aspiration to bridge the gap between cryptocurrencies and traditional asset classes, boasting features including leverage, advanced order types, and charting tools.
More about KuCoin
KuCoin already runs an over the counter (OTC) trading platform. The KuCoin OTC desk, which facilitates dealing between trade parties directly, instead of relying on the supervision of an exchange, joins similar services of other top US crypto businesses. Coinbase, Poloniex, Gemini, and Circle started their over-the-counter trading operations earlier last year.
KuCoin, established in September 2017, is one of the popular cryptocurrency exchanges, having handled almost $58 million worth of cryptocurrency transactions over the last 24 hours, according to coinmarketcap.com.
KuCoin had been in the news in late 2018 as the venue had once claimed to be based in Hong Kong. In August 2018, a journalist visited the site and discovered that the company was not actually there. KuCoin responded, saying that Hong Kong was the site of its mailing address, while its actual headquarters is in Singapore.
The crypto exchange moved to the EOS blockchain from Ethereum shortly after the former’s launch in April 2018, and earlier in November raised $20 million in funding from three different investment firms.