Fringe Finance use cases: Trade BTC vs ETH dominance — using Margin Trade

7 min readMar 14, 2024

Dive into the world of cryptocurrency trading with an edge through Fringe V2 Margin Trade, a platform that redefines your trading experience. Unlike traditional platforms, Fringe offers an intuitive user interface designed for both newcomers and seasoned traders, providing a seamless journey from decision-making to execution. With an expansive selection of asset pairs at your fingertips, you’re equipped to make moves that align closely with your investment strategy, all within the innovative ecosystem of Fringe V2’s lending and margin trading platform.

What sets Fringe apart is not just its user-friendly design or the variety of trading pairs available; it’s also the cost-efficiency and safety net it provides. With cheaper (partial) liquidations, you’re in a position to manage risks more effectively, ensuring your trading journey is both profitable and secure. Embrace the future of trading with Fringe V2 Margin Trade, where technology meets opportunity, giving you the tools to trade ratios between cryptocurrencies with confidence and precision.

Expecting BTC dominance to change and want to profit from this? Take a leveraged trade between BTC and ETH using Fringe V2 Margin Trade

Open a Margin Trade leveraged trading position between wBTC and ETH. wBTC is an ERC-20 token on EVM (Ethereum Virtual Machine) chains that correspond to BTC and by and large tracks the price of BTC.

If you believe BTC dominance will increase, you will use wBTC as the long side of the Margin Trade position and ETH as the short side.

If you believe BTC dominance will decrease, you will use wBTC as the short side of the Margin Trade position and ETH as the long side.

ETH is suggested here as the non-BTC dominance index for the other side of leveraged trade given it is a suitable proxy to represent the lion’s share of the non-BTC crypto TVL.

Let’s take the first example, where you believe BTC dominance will increase. The same principles apply for the case where you believe BTC dominance will decrease.

Before opening your Margin Trade position, obtain some wBTC as collateral for the chain you wish to operate on. Check the Fringe markets for each chain to find a chain that supports the collateral asset you’re using.

Step 1. Specify the Margin Trade leverage trading position that you wish to open.

Select wBTC in the Long Asset selector. Select ETH in the Short Asset selector.

Specify the Exposure amount and the Margin amount.

Exposure is the notional value that you wish to establish for this position. This notional exposure value is the amount of the short asset borrowed and then swapped for the long asset. To note — Notional Exposure = Total Exposure — Margin.
Margin is the amount of collateral you supply the position. Simply enter a dollar amount or use the up/down arrows to adjust the margin amount.
“Min:” refers to the minimum amount of margin you can specify and corresponds to any wBTC collateral you may have already deposited onto Fringe; otherwise, it is zero. (If you wish to use less margin, withdraw some from the platform back into your wallet.)
“Max:” refers to the maximum amount of margin you can specify and corresponds to the sum of any wBTC collateral you may have already deposited onto Fringe plus wBTC held in your wallet. i.e. the maximum amount of wBTC you have available as an initial margin.

In the simple example above, we’ve specified an (additional) exposure of $20 and a margin deposit of $55. This means the Margin Trade position will result in a total exposure of $20 + $50 = $75, thus leveraging the $55 margin deposit supplied. Therefore, you will enjoy leveraged gains as compared to if you merely held on to the wBTC without the leveraged Margin Trade position.

Exposure Limit — this field presents the available cash in the short asset capital market. This is the maximum exposure currently available on the Fringe platform for opening positions with the specified short asset.

Step 2. Open the Margin Trade leveraged trading position.

Now, press the Open Position button to open the Margin Trade position.

If necessary (i.e. if you have not already transacted with these assets on Fringe), Fringe will ask you to enable your wallet to spend your assets. This may include both the long and the short asset. Accept any such requests via your wallet.

Margin Trade will trade the short side of the Margin Trade leveraged trading position on your behalf for the extra long asset on an external DEX. Hence, there is a need to enable the short asset also.

Your wallet will ask you to approve the transaction to open the Margin Trade position. Once approved, the position will be opened and appear in the Open Positions list.

In the background, any margin amount that you specify that has not already been deposited as collateral will be withdrawn from your wallet and deposited to your Fringe collateral holding.

Tracking your Margin Trade position, maintaining it or closing it

You can track the performance of your position right on the Margin Trade page. Any time the Margin Trade page is opened or refreshed, the updated position figures will appear in the open position.

You can click on the open position to show the chart to see the price history of the position.

On the open position, there are three buttons that help you maintain your position.

“Deposit” button allows you to add collateral/margin to the position. This is useful to allow you to keep the position’s Safety Buffer at an acceptable level to minimize the likelihood of liquidation.

“Withdraw” button allows you to withdraw any of the position’s profit (long asset). This allows you to withdraw any profit for use elsewhere in the DeFi ecosystem while maintaining your open Margin Trade position.

”Close” allows you to either fully or partially close your Margin Trade position.

When closing a position, you may choose from the following:

Repay Using Collateral — this is the usual way to close a Margin Trade position, which will swap some of the extra collateral/margin for the short asset to repay the position. Or,
Repay — which will repay the position using the short asset directly from your wallet, if you have funds available in your wallet. You may choose to Repay using the short asset directly from your wallet when external dex markets will incur price impact above your personal tolerance.

Things to keep in mind

Current Price refers to the ratio between the long asset and the short asset.
The Liquidation Price indicates the price of BTC that will render your position eligible for liquidation — assuming no change in the short asset price. Depositing additional margin will lower the liquidation price, thus making the position safer and at less risk of liquidation.
The Safety Buffer indicates the percentage fall in the long asset price that will render your position eligible for liquidation. Depositing additional margin will increase the safety buffer, thus making the position safer and at less risk of liquidation.
APY indicates the APY you will pay on the short assets borrowed to open the position.
Choose your Exposure vs Margin wisely. While a higher exposure can lead to greater profits when the asset pair price ratio moves in your direction, this can also lead to greater losses if asset pair price ratio moves against you.
Monitor your positions. Leveraged trading can bring joy when positions move in your favor. Regularly monitor your leveraged trading positions so that you either exit them and take profit when you are winning or adjust them to avoid liquidations.

With this Fringe V2 Margin Trade guide, you’re now equipped with a roadmap to leverage the rising tide of BTC or your other favorite assets. From specifying your trading stance with precision to the dynamic management of your positions, each step is designed to leverage your trading potential. The guide aims to demystify the process with a blend of simplicity and depth and empowers you to navigate cryptocurrency trading opportunities confidently. As you embark on this journey, remember that the keys to success lie in choosing a wise degree of leverage, careful monitoring, and strategic adjustments. Embrace Fringe's innovative features and supportive ecosystem to turn market movements into opportunities. Happy trading!

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