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OpenLeverage has created a lending pool and enabled margin trading for the FUSE/WBNB pool on PancakeSwap. Fuse and OpenLeverage have provided the initial liquidity for the lending pool. OpenLeverage has also launched the lending and margin trading campaign incentivized with rewards in its native OLE token.
Robust trading activity in Fuse’s native FUSE token is essential for ensuring accelerated adoption for the Fuse technology, as most of the users of the Fuse-powered services are probably not going to be holders and will need to be able to buy and sell FUSE frequently without significant friction and high volatility. One of the means of boosting asset trading is margin trading.
Margin, or leveraged, trading involves market participants posting collateral and borrowing funds in order to be able to trade with higher amounts than they possess on their own. In the case of success, this can bring traders much higher profits than they could otherwise hope to get.
Margin trading has been a key feature of traditional financial markets and even centralized cryptocurrency exchanges for a long time. However, it has not been as easy to enable for trading on decentralized exchanges (DEX’s), as complicated smart contracts are needed to handle the multiple tasks normally performed by centralized financial intermediaries.
The OpenLeverage project has been at the forefront of overcoming the obstacles and making leveraged trading possible on DEX’s, and we are thrilled to announce that OpenLeverage has now partnered with Fuse.
Permissionless margin trading for DEX’s
OpenLeverage is a permissionless margin trading protocol geared towards DEX’s. Despite only having launched last December, it is already available for users on the Ethereum mainnet and BNB Chain (formerly Binance Smart Chain), with other major chain integrations in the pipeline.
The OpenLeverage protocol is permissionless as anyone can create a customized lending pool for any pair on one of the supported DEX’s. Once the lending pool has been created, anyone can contribute assets to it and start receiving interest. Margin traders can deposit collateral and borrow up to the amount consistent with the maximum leverage ratio. The risk of liquidation is mitigated by the lending pools’ built-in insurance and reserve mechanisms.
OpenLeverage’s native OLE token will be used to reward protocol participants for their contributions to the protocol. It is not currently tradable, yet, hence the rewards are not distributed at the moment but will instead be vested upon OLE’s official launch.
OpenLeverage relies on a robust OnDemand oracle functionality and flash loan protection to ensure the security of its protocol against exploits. More details on the workings of the protocol can be found here.
How Fuse integrates OpenLeverage
OpenLeverage has created the possibility for traders to trade on the FUSE/WBNB pair on the popular PancakeSwap decentralized exchange on BNB Chain (formerly Binance Smart Chain). To achieve this, the lending pool and margin trading have been set up that are integrated with the FUSE/WBNB trading pool.
In order to jumpstart the lending pool for margin trading, Fuse has lent $30,000 in FUSE tokens to the pool, while OpenLeverage has contributed an equal amount in WBNB. This means that it is now possible for lenders and FUSE/WBNB traders on PancakeSwap to lend to the lending pool and borrow from it to trade with leverage.
The maximum possible leverage ratio is 3X. This means that users can borrow up to two times of the collateral that they provide and can use the collateral and borrowed funds for trading. The interest rate for borrowers is currently set at 30% APR, and it is targeted at 10-15% for margin traders.
OpenLeverage will also make available 500,000 OLE in rewards for a campaign aimed at incentivizing lenders and margin traders on the FUSE/WBNB pool. The campaign rewards will depend on the volume lent or traded with a margin.
OpenLeverage also runs a referral program for the lenders and margin traders on OpenLeverage, including the FUSE-WBNB pool. The referrers will receive 15% of the rewards received by their invitees and 10% of the rewards obtained by the latter’s invitees.
PancakeSwap has lately become the DEX with the most active trading of the FUSE token. We are confident that the addition of leveraged trading thanks to the integration with OpenLeverage will help further establish FUSE as a major asset on PancakeSwap and raise its overall profile and trading volume.
Other projects on Fuse can also benefit by boosting the trading of their tokens via OpenLeverage. Fuse and OpenLeverage will also work on further extending the integration in the future, so watch this space.
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