Binance margin trading plans explained by Twitter user, CZ confirms plans

11 Jun, 2019
Binance margin trading plans explained by Twitter user, CZ confirms plans

While Binance is set to launch their margin trading in the coming weeks, with testing currently ongoing, many are looking forward to seeing what the exchange will offer compared to margin trading giant BitMex. 

Twitter user @DegenSpartan gave his feedback on what he expects the world's largest cryptocurrency exchange to offer when it opens it's margin trading offering.

The twitter user gave some interesting insights to what Binance could be offering. The exchange looks to be offering 7.57% APR to borrow, and will not run like BitMex exchange, but rather offering an internal rate based on supply and demand. Binance would essentially be using an interest model for trading, allowing users to borrow BTC, sell the BTC to USDT, and hold that position, and accrue interest in BTC until deciding to pay back.

Essentially Binance will be lending risk-free in their margin trading platform, by lending to both sides. Users will be 100% collateralized by their deposit with margin calls to be 1.1x of entire account balance.

The twitter user also suspects that Binance may offer interest on deposits once their margin trading is up and running. The method will allow Binance to give depositors a percentage of interest from margin traders who are loaning funds from Binance, meaning Binance do not need to make use of any of their capital.

Lastly, BNB token could also be used somehow to benefit traders, this could mean that an accelerated burning process if used for margin trading, however the twitter user expects that Binance "WILL offer interests on deposits once their margin trading is up and running smoothly"

While the thread is all the opinion of @DegenSpartan, Binance CEO Changpeng CZ Zhao commented on the thread saying "Pretty much spot on (pun intended) on every point. Honestly, you are smarter than us, figuring all of that out in such a short period of time. Respect!"

If this is in fact the case for what Binance margin trading will be offering, it could be a welcomed addition that will benefit both normal traders on Binance as well as margin traders. 

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