We currently have a limit at 10x leverage. Whilst this is working fine I believe that we might have some more opportunity to increase the trading volume if we increase the leverage.
I support this, but I think we should display a warning in the UI when leverage >5x. This will show that we are a responsible exchange. There should also be a “Don’t show this again” checkbox.
Have you tested the effects of a flash crash of say ETH down to $80 like last year around this time with a 20x leverage? If there are no issues then you should definitely unlock 20x. On top of the warning, I would add on top of it the liquidation price in larger font for all leveraged trades since it’s probably the most important number to remember. It should also state that all margin is forfeit/lost on liquidation.
For example in the image below: “Total Cost” should probably say Total Cost(Margin)
Below that and right above the trade button should be the liquidation price centered with a warning about losing 100% of the margin if this liquidation occurs.
With Maintenance margin at 6.25% the max lev on a position is 16x so that value would need to be decreased to enable 20x - the issue with providing leverage that approaches the maintenance margin limit is that users will inevitable click max lev and get liq’ed on tiny price action. Any reduction has to be met with a new maintenance margin structure.
One way of decreasing maintenance margin safely is to make it variable based on the size of the position, e.g. if the notional is <$10,000 → 2%, <$100,000 → 4%, >$100k → 6.25
I use 3-4x leverage on perp and already feel like a gambler, haha. Dear Lord, who is using more than 10x lev. on Crypto? Probably only scalping bots and arbs… So yeah, give them the tools, why not. In the long run it´s needed for other markets anyways.
The idea of dynamic maintenance margin req. from @will_sheehan is really good, I support it.
This is a super interesting way to approach it. So it’s more like protecting retail traders. I do wonder though if it would make more sense to do historical trading volume instead of position size? Though I suspect that would increase the complexity
As far as I understand it, his suggestion is more about protecting the protocol than protecting the retail trader. The bigger the position you trade the more restrictive is the margin. Retail traders usually don´t trade positions in the hundreds of thousands [in crypto], hence they have more leeway.
Maybe instead of fixed dollar amounts we could set the threshholds as a % of daily trading volume of the corresponding market. The more activity there is the more can be traded because the individual trader is not that significant anymore. From a risk perspective that makes sense.
