Binance intially announced that it would add margin trading feature on its platform in May. The exchange which is the largest in terms of trade volume has finally upgraded its service platform with the launch of the new Binance 2.0.
However, this is more than just an upgrade because the new Binance 2.0 comes with margin trading effectively allowing its investors to borrow on their holdings for trade.
Binance has taken the bold step into the risky but highly profitable margin trading. According to the exchange, investors would be able to borrow times three of their wallet holdings. This means that a trader who has 1 BTC could borrow extra 2BTC.
It is well known that investing in cryptocurrencies is very risky because of the volatile nature of the market. And so, as a rule in investing, people are advised to trade with extra funds they can lose. However, with margin trading, investing is done with borrowed funds.
Even with the promise of a better and bigger profit than the usual trading, your virtual assets are placed as leverage, increasing investment risks.
Meanwhile, the new upgraded Binance 2.0 is mainly aimed at expanding user interface and creating more options for customers. Users can make their normal exchange like before or choose to switch to the margin trading platform.
In addition to this, it is possible to move trading funds from one platform to another without additional costs.
Joint owner of Binance, Yi He said that Margin Trading platform is:
“one of the most requested services from our community,”
In the statement on the new feature, the exchange announced that it is avilable for users that have passed the exchange’s KYC identification process.
Soeaking on the feature, the company CEO Changpeng Zhao, said,
“This is another step in providing an inclusive cryptocurrency trading platform catering to the needs of both advanced institutional traders and retail traders under the same roof. We are providing a new tool in the financial services and cryptocurrency markets to help amplify trading results of successful trades.”
The exchange did not mince words in its disclaimer on the risks involved:
“Margin trading is highly subjected to market risk, volatility, and complexity. It is a sophisticated product and you are highly advised to exercise prudence and caution”
Binance has been improving on its platform since it was launched, making it one of the most preferred cryptocurrency trading platforms in the industry.