Cryptocurrency trading platform Gemini has announced that XRP, Shiba Inu (Shib), Dogecoin (Doge), Solana (Sol) and Bitcoin Cash (BCH) can be used as cross-coln.
The major trading platform run by Winklevoss Twins debuted its derivatives cross-corral in early 2024. Initially, users could only use Bitcoin (BTC) as collateral for derivatives.
How does cross margin work?
Users trading derivatives must open their positions and deposit collateral to ensure they can maintain it. Collateral is intended to allow users to cover potential losses.
In the case of cross-sectional side, you can use multiple digital assets as collateral, not just the silly thing like USDT. In such a way, traders can make idle coins work.
The user’s margin asset value is calculated by the platform. This is the total amount that can be used to maintain the transaction.
For example, if you have 1,000 Doge (equivalent to $226), 1 Sol (equivalent to $183), and 10 XRP (equivalent to $31), the collateral pool would be around $440. This amount of cipher can be used to support the leveraged liberative location.
Liquidation risk
If trade goes south, the platform will settle collateral. Users may lose all their secured crypto assets.
It is also worth noting that the value of such tokens, such as XRP and SHIB, can drop at a very rapid pace during major selling. This increases the risk. For example, on July 24th, XRP prices collapsed by about 10%.
Therefore, it is generally recommended that you diversify your collateral when choosing lower leverage while engaging in margin trading.