Decentralized exchange RADAR today announced an extension to its decentralized exchange (DEX) aggregator service, RADAR RELAY, which makes it easier and cheaper for customers to place complicated margin trades. And it does it by soldering together two of the most popular DeFi trading protocols, 0x and dYdX.
Margin, or leveraged trading, means to borrow some money and then use that money to place trades. It gives you more purchasing power. So with RADAR’s upgrade, its users can now, for example, borrow five times the amount of the Dai stablecoin they own to trade ETH. Yes, that’s as risky as it sounds.
“On DEXes today, if you want to enter into a position that gives you more exposure to an asset, that’s going to require you to go to a couple of different venues and execute a couple of different transactions.” Brandon Curtis, director of R&D at Denver-headquartered RELAY, told Decrypt.
RELAY’s new extension lets users execute those trades in one click. Essentially, it reduces the number of hoops customers must jump through to place complicated leveraged trades. These trades allow for complex trading strategies—immensely profitable if you’re smart (or lucky).
The three-year-old company, which trades about $60,000 each day (small potatoes compared to centralized exchange Binance’s $5 billion worth of daily volume), built the new extension by bodging together the 0x API (think a decentralized SWIFT financial messaging system) and dYdX’s margin engine. (dYdX is a decentralized margin protocol and trading platform).
“So by connecting, some of the liquidity aggregation that’s been going on in the DEX space with a margin protocol developed by dYdX, we allow you to get in and out of those positions as easily as you can currently trade on a DEX—just a single transaction to enter and exit these positions,” explained Curtis.
Currently, RADAR RELAY’s new extension supports ETH pairings with decentralized stablecoin Dai and the centralized stablecoin from Circle and Coinbase, USDC. The extension also supports a DAI-USDC trading pair and can support additional margin pairs added by dYdX.
The extension supports trades with up to 5x leverage (you have five times the purchasing power of the crypto you own) and short positions with up to 4x leverage.
RADAR RELAY’s extension also gets rid of minimum trading sizes. dYdX requires trade minimums as high as 40 ETH (~$17,000), plus gas fees and a trading fee. With RADAR RELAY’s extension, there is no minimum trade size and no trading fees (though users will still have to cover their own gas fees).
Curtis said he hopes the tool will be used by traders hoping to make the most of the current decentralized finance (DeFi) boom, much of which exists on Ethereum, and will inspire more efforts to unify different DeFi products.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.