💸
Margin Trading
When a trader opens a position, a commitment and a liquidation fee are locked in their balance. Commitment size depends on the leverage. If the position has a loss more than the commitment size (and a 10% tolerance range), the smart contract allows anyone to liquidate the position and earn the liquidation fee. At any time, traders can add additional commitment to their positions to prevent liquidation. When a trader closes their position, commitment and liquidation fee are returned to their balance.
Traders can also use stop-loss and take-profit functionality during the opening of a position. These orders can be opened and closed by other users through smart contract interactions in a similar manner to liquidations. As a result, a reward like the “liquidation fee” is also paid for stop-loss or take-profit. Naturally this is only possible if the trade is within the desired parameters of the trade or liquidation.
The liquidation fee is fixed for each trade and updates depending on the gas prices. This fee is malleable to provide stable financial incentives.
Degen Protocol accepts trading fees in any token, which is then always swapped to DGN. This also means that traders can pay fees in DGN directly, which omits the gas fees incurred when swapping tokens. This mechanism results in a positive feedback loop: staking rewards increase due to buy pressure on DGN.
Degen Protocol takes a trading fee that can be paid in any token, but it will always be swapped directly to ETH.
Last modified 1yr ago