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ENG
WOO DAO
Margin trading
Margin is a tool for taking larger positions with less funds held on the platform. Margin is a subset of leverage where the platform lends money to the user. This enhances both gains and losses so should be used only after fully understanding the risks.
Currently, the only leveraged trading available on WOO X is spot margin. Spot margin trading on WOO X allows to enable up to 5x borrowing power. Unlike in derivatives (futures and perpetual swaps) trading where users are buying/selling contracts speculating on the future price of an underlying asset, leveraged trading on WOO X allows users to borrow funds for spot trading. When margin trading is enabled, you can increase your buying power up to 5x. Your ‘buying power’ is the sum of your collateral and shows your maximum possible position size based on the leverage you choose.
Liquidation: 3 steps to protect your funds
Leverage trading is commonly believed as a risky activity as it magnifies both potential profits and losses that a trade can make. Unlike other trading platforms, WOO X implements a protective liquidation mechanism that prioritizes user’s funds during times of volatility.
The leverage ratio indicates the risk your position is currently exposed to. The default ratio is 1,000%, indicating you haven’t opened any position. If your ratio falls below 10% which is the maintenance margin ratio on WOO X, the liquidation engine will be triggered.
Unlike in other exchanges, it takes 3 steps to fully liquidate your position on WOO X:
Step 1: The system cancels all the pending orders.
Step 2: The engine aims to cancel 50% of the position with IOC (Immediate or Cancel order).
Step 3: If the leverage ratio drops below 10% within one hour, the engine will fully close down your position, at the price as close to the bankruptcy price as possible.
The three-step liquidation process significantly reduces the likelihood of the user's account being completely reduced to zero when triggering liquidation. In the event of a full liquidation, WOO X protects the liquidity of the order book by transferring remaining positions to a liquidity provider; therefore, the system significantly reduces the possibility of cascading liquidations in the market.
Margin interest fees
With margin trading, any negative balances will start accruing interest hourly and will continue accruing interest until the balance returns to zero or positive. Interest owed is based on the maximum amount borrowed in each hourly period. The interest calculation is based on the following formula:
Interest on the hour = Max (Borrowed assets on the hour) * Interest rate on the hour
You need to repay in the same coin as what you borrowed. The interest rate is different for each coin on WOO X. The interest rate of each token adjusts every hour based on overall supply and demand. You can query the real-time interest rate under the Account info tab or via API.
*Interest rates are dynamic and fluctuate with market demand for borrowing. For the latest rates, check WOO X under the Account Info tab.
Last modified 8mo ago
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