The Orbs protocol, which runs on Binance Smart Chain, HECO, and Polygon Network, allows leveraged trading in the DeFi space. There are smart contracts on WOWswap that allow users to borrow funds in order to finance leveraged trades on decentralized AMMs such as Pancakeswap.
Leverage is a tool that allows traders to use a relatively small amount of their own money to increase the potential return of investment and gain market exposure. The borrowed funds come from external liquidity pools.
However, opening these kinds of leverage positions can be risky, and users should be aware of the possible consequences.
One of the benefits of WOWswap is a simple interface. There is a leverage slider that users can set from x1 (no leverage) to x5 (maximum leverage).
On the WOWswap platform, information about loans and Hourly Interest Rate (HIR) is located in the lower part of the swap screen.
After completing a swap, you get proxy-tokens fixed 1:1 to real tokens held by WOW smart contract on your behalf. The protocol needs proxy-tokens so it can guarantee repayments for user loans.
With leveraged trading, there are always risks of liquidation.
There are four reasons for the liquidation of a trading position. If the price of a token that a user bought decreases or the price of a borrowed token increases. When the position stays open for too long the value of the debt taken for the position approaches the value of the position.
And finally, WOWswap’s community significantly increases the Liquidation Margin parameter via Governance. So if anyone is planning on opening leveraged positions, it’s crucial to educate yourself on the matter of relevant risks.
The Orbs project’s integration into BSC has seen the native token being added to PancakeSwap at the end of April 2021, and note-worthy follow-up initiatives took place on BSC. PancakeSwap launched the Orbs syrup pool known while Beefy Finance added Orbs to their vaults. Furthermore, Alpaca Finance has also chosen to launch an Orbs campaign.
All of this mentioned led to a boost in the Orbs community’s on-chain activity on BSC.