The DEX market keeps growing at an admiring rate providing countless opportunities and choices for the global Cryptocurrency community. This new development weaved around Decentralized Finance (Defi) seems to be the fasters growing sector in DLT.
bZx is referred to as the most powerful open finance protocol. As a decentralized protocol, it permits lending and borrowing for margin trading. It allows the integration of exchanges via the inherent bZx gateway.
The platform expedites the creation of applications that grant lenders, borrowers, and traders with the most adaptable DeFi protocol on the Ethereum Blockchain. DEXs require operations like margin lending and clearinghouses.
Nonetheless, bZx ensures liquidity making use of trustless Smart Contracts. It links centralized and decentralized liquidity pools employing tokenized margin loans. Through its Universal Liquidity, one can access the whole margin credit bourse in a decentralized manner.
The exciting part is that creditors can grant a loan to an entire pool of borrowers, equating the risk over many people. More so, credit is covered by insurance from the bZx guarantee fund.
The project is the maiden thoroughly decentralized, p2p margin funding and exchanging protocol using the BZRX token through relays to settle trading charges. bZx is not a Crypto exchange, but it serves as a contract that can blend into any digital asset buy and selling platform to make the trading process quicker and more smooth.
How bZx Margin Trading Operates
There are three elements here, which are Short, Long, and Leveraged Position when it comes to the bZx margin trading. Experts see Short Positions to be fraught with ample complexity or risk. With this, you bet that the market will sink or crash in the coming days. It always needs structures like escrow, leverage, and margin calls.
On the other hand, Long Positions are when market players swap one particular asset for another in anticipation of one going up against the other. The bZx website gives an example of exchanging DAI for ETH, hoping ETH will adjust upwards in value faster than DAI.
When it comes to Leveraged, it is similar to Short. However, the only variation is the capacity to borrow more than what you are holding. It means that you could, long an asset as much as 100x. According to bZx, integration of exchange and web3 wallets into the protocol is effortless.
iTokens and pTokens
iTokens regularly rise in value due to interest accumulation with examples such as iDAI or iUSDC, but pTokens are a representation for short and leveraged positions. The two can be fashioned into a unique financial output, applied as security for loans. It can also be listed on exchanges where it allows trading and lending in real-time.
Through Fulcrum and Torgue, which are all projects built atop bZx, you can buy pTokens which grant you access to a short or leveraged position you want. There are three ways to utilize them, which include trading them on the exchange, using them as collateral to secure a loan, or reclaim the underlying token.
Benefits To Users
With bZx, both lenders and borrowers have complete control of their private keys, getting leverage over their funds. The arrangement offers peace of mind over security breaches and cheating exchanges.
Besides, asset owners have the opportunity to make money lending it out without surrounding control of it. Loans on margin trading also have higher interest rates than conventional credits as being secure.
Moreover, not forgetting lower interest rates enjoyed by traders, unlike those using centralized exchanges since lenders risk losing the funds in likely event of a security breach. Stimulatingly, with a decentralized margin trading, the cost is always lower.
Governance And Partners
The bZx runs a community governance system incentivizing members to contribute to the ecosystem. When someone stakes BZRX to a representative, there are four various benefits. There are Fee sharing, Balancer Fees, BAL Rewards, and Insurance Funds. Under Fee Sharing, you get 10% rewards of the staked BZRX of the Balancer Liquidity Pool.
When it is about Balancer Fees, the pool supply liquidity to traders and the protocol. Therefore the fees go to those who have shares in the pool. Then, the BAL Rewards are reinvested in the Balancer pools, letting BZRX stakers to evenly profit. For the Insurance Fund, it derives 50 percent of the origination fees from interest payments and fees from trading. Every BZRX can be obtained for a comparable value of the insurance fund not previously designated in BZRX.
All decision making in the community comes from voting with BZRX tokens. It could be the determination of the dimension of fees charged to the insurance fund or the percentage of rewards.
Currently, bZx has partners and collaborators like Kyber Network, Chainlink, Augur, Maker, Rigoblock, Wyre, Signal Ventures, DeversiFi, and DeFi Pulse. You can follow bZx on Twitter, Telegram, Discord, and if you are technical, on Github as well.