The invention of the Internet has revolutionized the trading industry, making it a lot more accessible to regular people. In fact, most people had no access to the markets prior to this, as they needed to be rather wealthy in order to participate individually.
The Internet changed that, making it possible for everyone to enter the markets with significantly lower amounts of money.
Of course, the purpose of trading and investing is to make money, and new ways of doing so kept being invented. New, more successful trading strategies emerged; people sought out brokers with low fees and top-quality services, and alike. But, as it is always the case, traders always tend to want to earn more, regardless of how successful they have already been.
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This led to the invention of margin trading, also known as trading with leverage, where traders can take up a loan from their brokers and use it to enter high-risk trades, and buy assets that are valued several times more than the money they themselves have brought to the market.
This type of trading may come at greater risk, but it also amplifies the rewards by several times, thus making it extremely profitable for those who do it properly.
The Rise of Crypto
With the invention of cryptocurrencies, and then their rise to the global trading scene, many rushed to join the crypto market. The reasons behind this are obvious: transactions are faster and cheaper, trading is possible 24/7, and crypto-assets are a lot more volatile than anything you can find in the traditional financial industry.
After a while, even trading with leverage emerged in crypto, and for a time — traders were more than satisfied with the new possibilities.
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The only problem was that those who went crypto often also sought decentralization, which is something that the crypto industry promised since its very first day. But, decentralized exchanges (DEXes) already faced problems such as low liquidity. Low liquidity prevented the traders from joining, which in turn prevented liquidity from growing.
However, this did not last long, either. New projects that offered liquidity for hire emerged, often through incentivized programs where traders were offered rewards for making their assets available, and so DEXes started to grow in popularity.
The only issue was that there was still no decentralized margin trading available — until now.
Enter UniMex: The First Decentralized Margin Trading Protocol
The explosion of the DeFi sector in 2020 brought a lot of projects offering decentralized banking to life. Among them emerged UniMex — a Uniswap DEX-based protocol that allowed margin trading within the world’s largest decentralized exchange, and by using Uniswap’s native tokens.
It brought innovation to the decentralized trading sector as it finally secured the functionality that has been missing for so very long.
UniMex works by using a central factory smart contract. The contract deploys other, lending pool contracts, which are essentially just smart contracts that let users lend specific ERC-20 tokens that margin traders can use to enter leveraged positions.
Unfortunately, only ERC-20 tokens that are paired against Ethereum on Uniswap can be traded with leverage. This was done as a security precaution, since it would be rather easy to manipulate low-cap tokens’ prices otherwise. So, even on Uniswap, the situation is still not perfect, although it is much more advanced than any other decentralized marketplace out there.
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