New revelations from a pair of crypto sleuths indicate Binance is gearing up to launch margin trading.
Reddit’s Enriquejr99 discovered a line of code on Binance’s public API documentation last month with the flag “isMarginTradingAllowed”. A fellow Redditor named Lifofifo then decided to dig deeper, and in a new post says he found nine trading pairs linked to the flag.
A high-risk, high-reward trading practice that can lead to substantial gains, if a trade goes well, or huge losses, if a trade goes poorly, margin trading allows an investor to borrow money from an exchange to increase their buying power.
In a February interview with Venture Coinist, Binance CEO Changpeng Zhao said margin trading would be very profitable for Binance. At that time, however, the company’s immediate focus was on launching its decentralized exchange, Binance DEX.
“I think margin trading itself is actually very profitable for exchanges, if you look at BitMEX. It actually has very high volumes and when you do high leverage, you actually get commission fees on the leverage part as well. Plus interest on the leverage, et cetera. So it’s actually very profitable for exchanges to allow margin trading. It’s beneficial for our business.
We’re just working on security. We have so many people working on security products that we actually didn’t get to margin trading. And we wanted the decentralized exchange, et cetera. So I view margin trading as a tool for the heavy traders, or heavy speculators to trade…
For us, I think the priority is to grow the ecosystem. So we want to focus on the DEX, we want to focus on being able to help other tokens launch. So that’s why our focus has always been a little bit different from some of the other exchanges.”
As for the impact of margin trading on the market, Zhao says some traders may try to manipulate the price of crypto assets via spot trading when contracts are about to close, but in the end he thinks coins will always be valued by their utility.
“I think also for the industry, having short ability should not affect coin price. You may affect it short term. There’s more volatility, there’s more speculation. The guys being short, when a futures contract is about to settle, some of them will try to manipulate the spot price. But overall, those are just sort of speculative trades. How much a coin is worth is still based on utility.”