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LnMarkets: a Low-risk Trading Platform for Bitcoin Derivatives

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LNmarkets is a platform for trading bitcoin derivatives through the Lightning Network. With LnMarkets, trading is simple, cost-effective, and fast. In fact, the trading and transfer of bitcoins funds occur simultaneously, giving users a supportive environment. 

According to its Newsletter, LnMarkets aims to offer a unique trading experience to its users on its bitcoin infrastructure, disrupting the traditional trading financial sector’s logic. This is achievable through its programmable tools that reduce trading risks but increase transparency. 

Users are in charge of most trading activities that take place on the platform. For example, traders open and close positions using the Bitcoin Lightning Network protocol, clearly deviating from the traditional trading practices. After closing the positions, there is a direct and automatic transfer of the bitcoin funds to their wallets.  By using the Bitcoin lightning protocol to perform most of the trading functions, users avoid the cumbersome traditional process of depositing their funds into the platform before executing the trades. Instead, users connect their wallets directly to the LnMarkets platform. 

LnMarkets’s business model is straightforward yet very effective. The platform quotes a bid-offer and levies 0.1% per trade. Therefore, there is no complicated fee structure, which includes funding rate or maintenance margin. Above that, the Lightning Network operates as an authentication and settlement layer for the payments, further simplifying the trading experience. 

The LnMarkets performs the role of a broker as it automatically takes positions on behalf of the traders. All that a trader has to do is to submit an order and agrees to the transfer margin. After which the trader receives a Lightning invoice. In agreement with the transaction, the trader makes a payment.   The rest of the bitcoin funds not used in the position remains in the wallet. As a result, there is very low if any counter risk. 

Networks for transactions

Mainnet and Testnet are the two networks that LnMarkets interface with, providing a unique trading experience to its users.

Testnet: Inexperienced traders use the Bitcoin Testnet platform to learn and hone their trading skills. The Testnet coins that users trade with have no value other than being trading demo crypto assets. To use Testnet, an individual should have Lightning Network wallet with a few Satoshi. Moreover, users acquaint themselves with the LnMarkets technology when carrying out a demo trading exercise on Testnet. 

Mainnet: This is the real bitcoin trading network. Traders use bitcoin derivatives such as CFD when trading. Unlike Testnet coins the Mainnet coins have value. 

There are a few requirements for someone to trade at the LnMarkets platform. The major requirement is to fund the Lightning wallet with path or channel with the LnMarket Nodes. There is no need for the user’s private data or email and password. Like we expect, the user has ownership and control on the funds in the Lightning channel before trading. 

One can use either the Lightning wallet which supports lnurl-auth or Joule. The maximum allowable amount per node is 1 million sats or 0.0l bitcoins. However, there is a leverage of up to 50X. Like in most cases, when using leveraged trading, there is quick liquidation of positions. Therefore, traders should keep a watching eye on their trading positions. The good thing is that there are no liquidation fees. 

In some cases, user create accounts in order to trade on LnMarkets. To do this one sends 100 satoshi and create a username and password. However, this option is not always necessary since the platform’s architecture best suits account-less authentication. 

 Community

The LnMarkets community is growing rapidly, explaining the high interest people have in bitcoin derivatives trading. You are most welcome to become the latest member of this community. You are free to join any of its social platforms.

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