DeFi protocol UniMex is a new protocol that revolutionized trading on decentralized exchanges by bringing margin trading to the table, thus making DEXes equal to CEXes in this regard for the first time.
Cryptocurrency trading has grown to be bigger than ever, and with the rise of the DeFi sector and the increased amount of money pouring into the sector’s projects, decentralized exchanges (DEXes) finally got their chance. DEXes have seen a massive amount of advancement and development over the last 12 months. So much so, in fact, that they are now among the biggest DeFi projects out there.
But, with that said, there is still one feature that is missing on most of them, and that is trading with leverage, or margin trading. Decentralized exchanges simply could not offer it and have it safe and reliable. Until now, that is. Now, there is a project that has finally brought margin trading to DEXes, and its name is UniMex.
The Importance of UniMex
Margin trading has grown to become a crucial part of the trading industry, as it allows traders to significantly boost their profits, provided that everything goes as planned, of course. Naturally, the crypto industry is extremely volatile, and as such, it already offers some pretty great opportunities for skilled traders. However, by adding leverage, traders can increase their earnings 2, 5, 10, 50, or even 100 times.
Centralized exchanges had it for years, but in the DeFi part of the crypto industry, there was too much uncertainty in the execution of orders, and so margin trading was left on the side, waiting for the technology to advance enough and solve the issues.
Enter UniMex, a revolutionary on-chain trading protocol that offers margin trading on the Uniswap exchange. It allows traders to short or long coins on Uniswap directly, although only those that are paired against Ethereum. This makes it a bit limited, and to some, not as decentralized as they would have wanted it, but it is necessary to prevent price manipulation and exploitation of low-liquidity pools.
Risk vs Reward
As is the case in centralized trading, crypto trading comes with massive amounts of risk, especially during more volatile periods. Adding margin itself carries huge risks, as your room for making a mistake is significantly reduced. Combining the two and trading cryptocurrencies with leverage pushes the risks to an extreme level. So, why do people do it? Because the rewards are worth it.
The greater the leverage — the bigger the risk, that much is clear. However, the rewards also get much, much higher, and this is why trading with leverage tends to attract multiple kinds of people, including professionals who work with large amounts of money, but also risk-takers, who enjoy the thrill of risking money. Of course, there are also inexperienced investors who are after the big bucks, but they are rarely successful, as most of them are out of their depth, which leads to losses, disappointment, and claims that it is all just a big scam.
Naturally, it is not. It just requires a lot of knowledge, skill, a good trading strategy, and expert-level ability when it comes to making price forecasts.
UniMex can offer trading with leverage by using a central factory smart contract, which deploys lending pool contracts. In essence, these are also smart contracts that allow you to lend certain ETH-based tokens, so that margin traders can enter positions with leverage. As mentioned, ERC20-ERC20 pairs are not possible, at least at this time, and all coins that can be traded with leverage need to be paired against ETH. However, this also leaves a large variety of coins to trade.
UniMex’s contribution to the development of DeFi might not seem that big at first, but it is actually very important, as it finally allowed DEXes to offer a highly popular trading mechanism, which was previously only found on CEXes. As such, it provided margin traders with a decentralized version of a mechanism that may have been the only thing that kept them on centralized exchanges. It certainly helped DEXes take the next step at becoming equal, if not better than CEXes, and with that, it became one of the most important DeFi protocols out there.
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Website: https://unimex.network/ | https://unimex.trade/