Bullish margin trading allows eligible Bullish Exchange institutional customers to borrow assets for the purposes of transacting on the Bullish Exchange (“Margin Loans”) and to lend assets to fund Margin Loans.
Borrowers are able to maximize their trading power and capital efficiency by borrowing additional assets on-demand to trade for variable periods.
Meanwhile, lenders can earn interest from their idle assets by creating loan offers that can be used by borrowers.
Bullish margin trading is cross-collateralized, so all assets in a trading account are used as potential collateral, even assets that are locked in limit orders. Assets in other trading accounts will not be used as collateral for margin in this trading account.
Collateral is measured in US dollars, and each asset has a specific multiplier associated with it - the Collateral Rating which determines how much of the nominal USD value will actually be used as collateral. Some assets may have a collateral rating of 0%, meaning that they do not contribute towards collateral at all.
Matching Lenders with Borrowers
Our Margin services seamlessly matches borrowers' request to borrow assets (“Borrow Orders”) with lenders' instructions for lending assets. The APR is set by the exchange and subject to change. Over time this will move to a market-driven model that finds the optimal APR for the current market conditions, so that borrowing and lending volumes are maximized.
Auto-borrow to trade
You can toggle between Spot and Margin trading by switching the “Margin” on/off button. Turning on the "Margin" button allows you to buy and sell, enabling the engine to borrow if necessary. Even if the “Margin” button is on you will only be charged interest on the actual incremental borrowing incurred (if any). If the “Margin” button is on but you do not need to borrow you will not be charged interest. Your trades will never result in additional borrowing if the “Margin” button is off.
The margin panel displays the expected Incremental Borrow and Total Borrow quantities on a best-effort basis. You can never exceed the Maximum Initial Leverage that you have set on that trading account by placing an order, although it may happen later due to subsequent market movements.
You do not need to explicitly repay your loans. As soon as there are sufficient idle funds in your account they will be used to repay loans. See Repaying loans
Liquidation refers to the process of partially or fully decreasing the borrowed value to increase collateral when the collateral value falls below a certain threshold. Borrowers are exposed to the risk of default when the market moves against them. Lenders also bear potential losses if the borrowers that are matched loan parties with the lenders are not able to repay their loans. To protect all market participants and ensure fair and orderly markets, the Bullish exchange implements Smart Liquidation.
When your leverage reaches a certain Health Indicator, the Bullish Liquidation Engine will take control and start partial and eventually full liquidation of your position by selling off your assets at prices close to the wider market’s prices.