IoTeX and WOWSwap enable free leveraged trading – a whole new world of utility for native chain tokens
WOWSwap expands its trading toolkit thanks to a partnership with IoTeX, a fast, secure, and decentralized platform. It brings zero-cost decentralized leveraged trading to your favorite tokens, as well as more use cases for the native ones. There’s a lot to dive into here, so grab a coffee and read on to learn how to trade with leverage at zero cost.
Before the DeFi era, native chain tokens such as ETH, ADA and BTC had limited utility. Sometimes called utility tokens, they paid for gas fees, secured the network or could trade on centralized exchanges such as Coinbase. Nowadays, however, native chain tokens play a much broader role in DeFi.
According to DappRadar, decentralized exchanges (DEX) are the top grossing projects in crypto. Furthermore, decentralized trading is probably among the most useful functions of every blockchain. Curiously, utility tokens on DEXes tend to trade not against stablecoins, but against their native tokens such as ETH, BNB, and AVAX–despite the inherent price volatility.
Uniswap, Sushiswap, Pancakeswap, and other DEXes’ native tokens work as liquidity pairing tokens. As a result, project token prices tend to correlate with the prices of native chain tokens.
In practice, that means that when BNB price goes up, many BSC-based tokens also appreciate and vice-versa. Evidence would suggest that native chain tokens evolved to play important roles as sources of liquidity for DEXes. They simultaneously serve as trading pairs for project tokens.
A secondary trend relating to native tokens and their blockchains is quite obvious: high-levels of competition. Many chains offer fast transaction speeds and low-gas fees. These are the foundations upon which native chain tokens flourish. With that come serious financial rewards. Polygon, for example, committed more than $100 million in farming rewards to AAVE users. Avalanche Foundation recently announced Avalanche Rush, a $180 million DeFi incentive program.
However, such programs have clear-cut limitations. First, they create selling pressure on native tokens. Plus, if done carelessly, it undermines the value for token holders
With the likes of Fantom, Near, and Harmony waiting in the wings to pounce on any weakness exposed in the more popular blockchains, it’s a harsh playing field. In addition, there are massive liquidity mining rewards available on these chains. When token prices appear cheaper, it could also attract new users and capital.
Zero-cost decentralized leveraged trading
It’s a bit of a mouthful, but zero-cost decentralized leveraged trading is a game-changer. It’s a serious boost to the cryptocurrency ecosystem. Allow me to explain.
Thanks to multi-chain bridges like Anyswap, popular digital assets such as BTC, ETH and USDT can migrate to any chain for trading. So, in light of all of the above reasons regarding competition and trading pairs… Why would users stay loyal to one chain over another?
Since fast-speed transactions, low-gas fees, and liquidity mining rewards are no longer unique features, top blockchains might be interested in offering an added extra. What if a chain could provide its users with more digital assets for the same amount of stablecoins? Yep, that’s right; more bitcoin, more ether, or more AAVE.
For example, imagine that for roughly 4876 USDT on Avalanche and BSC you can buy 1 ETH. However, over on the IoTeX blockchain you get 2 ETH. Where would you take your USDT and start trading?
WOWSwap is off the chain
That’s where WOWswap comes in. WOWSwap has developed a new use case for native chain tokens. Aptly named ‘zero-cost decentralized leveraged trading’, it works with native chain token liquidity.
Basically, in WOWswap, users can borrow native chain tokens at a 0% interest rate to buy other tokens with up to 2 times leverage. It sounds too good to be true, but in reality, it means that users can purchase 100% more of their favorite token–absolutely free.
From a business perspective, using native tokens for leverage trading over liquidity mining programs is advantageous. Liquidity mining rewards are costs, and those rewards sold on the market never come back to foundations. Zero cost leveraged trading, in contrast, keeps assets under the control of liquidity providers.
It all comes out in the wash as a short-term interest-free loan to the chain users. Also, tokens purchased with leverage on WOWswap never leave the chain, contributing to the chain’s overall total value locked (TVL).
The financial impact of leveraged trading on WOWswap is significant. It creates 2-3 times more trading volumes for its DEX partners and generates 7 times more in gas fees than non-leveraged trades on DEXes.
The future looks wow
IoTeX became the first blockchain to recognize the potential of zero-cost leveraged trading for its users. Kicking off imminently, IoTeX users have free access to large liquidity pools on WOWswap.
With these pools, they can make up to double leverage swaps–without paying any interest on borrowed capital.
At launch, the following tokens are available for zero-cost leveraged trading: BTC, ETH, as well as other popular tokens. IoTeX and WOWswap will closely monitor the adoption of their exciting new feature. If and when successful, whitelisting will cover more tokens for leveraged trading.
Meanwhile, over at DappRadar, we will continue to follow WOWSwap’s leveraged trading journey. Click here to keep up to speed with WOWSwap’s progress and here for stats on TVL.
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