5X Finance allows users to trade DeFi assets with up to 5X leverage! NodeSeeds secured an investment in the platform’s seed round.
Partners In Margin
The outsized returns of DeFi have tantalized market participants since mid-2020. It’s difficult to avoid the attractive prospect of identifying a young, promising project and striking it rich with your fellow investors. Many crypto fortunes arise from the slow and steady accrual of insightful investments over time. However, the rising demand for margin trading opportunities shows that many market participants are interested in more sophisticated risk management and asset allocation approaches.
Margin trading isn’t new — Bitmex, one of the largest crypto exchanges by volume, has allowed margin trading since well before 2017. 5X Finance leapfrogs these centralized margin enablers by allowing users to take on up to five times leverage in a completely decentralized manner. This process is a logical step in the continued development of decentralized finance. Rather than relying on a centralized third party to facilitate leveraged positions, 5X Finance does so algorithmically.
The Secret Sauce
5X Finance squares the circle of decentralized margin positions eloquently. When a trader puts up 1 ETH as collateral, the protocol calculates the current average rate for borrowing ETH, then sends an additional 4 ETH to the trader’s remote wallet. Traders cannot withdraw remote wallet funds but can use them for leveraged trading in permitted pools on Uniswap, SushiSwap, Pancake, and 1Inch.
But where does the protocol find this extra ETH? 5X Finance incentivized liquidity providers by offering them interest on their loaned capital. Should a user’s position enter liquidation range, the protocol automatically closes the position to ensure the liquidity provider’s principal and interest. In this way, 5X Finance offers liquidity providers a low-risk option for lending their assets.
The 5X token stands at the heart of the platform and maintains several use cases. Liquidity providers receive interest in 5X tokens and can stake these tokens for additional revenue-sharing opportunities derived from liquidation. Additionally, users can use 5X tokens to participate in protocol governance, vote on platform proposals, and steer future protocol development. A buyback and burn program ensures an increasing level of token scarcity over time.
The reality of the situation is that 5X Finance is a sleeping giant in the industry. Supported by Platinum Dao, 5X Finance has access to some of the most recognized development talent in DeFi. The oracle giant Chainlink recently gave Platinum Dao recognition for integrating Chainlink for price feed data, demonstrating the organization’s pedigree. In a bull market environment where qualified developers are increasingly hard to come by, 5X Finance occupies an incredibly promising position.
Outsized Returns
The 5X Finance team moves the needle of DeFi by empowering users with decentralized margin trading. As DeFi continues to eat the world, Nodeseeds continues to identify world-class teams like the one at 5X Finance. We’re incredibly excited to be a part of this rapidly evolving industry by intelligently allocating capital for the benefit of our amazing community.
As you might imagine, the growth we’ve experienced at Nodeseeds has been astounding. It can be hard to keep up at times! Thankfully, we have a strong presence on social media, and you can check out our monthly investment report to stay on top of the exciting moves we make each month. Make sure to connect — you don’t want to miss out on these upcoming developments.
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