In the midst of the crisis caused by the Coronavirus, the crypto world does not stop. Much less do companies like Binance, which has announced several news in recent days. Being one of the most recent of them the cross collaterals in Tether, to carry out operations in Binance Futures, launched in February.
What are cross collaterals?
During these days of world crisis caused by the Coronavirus, we have been able to verify that innovation has not stopped its march in the crypto world. On the contrary, new ideas and Blockchain projects emerge daily, which solidify the foundations on which the crypto market rests.
And among the most innovative companies in the crypto community, one of the most prominent is Binance. The cryptocurrency exchange that yesterday released information about the new product of its Binance Futures platform: the cross collaterals.
Cross collaterals are a mechanism devised by Binance, to allow users of its platform to trade future contracts on Bitcoin in Binance Futures, using the stablecoin Tether, without having to own a single Tether.
The operation is quite simple. Binance will provide you with a loan in Tether in exchange for a guarantee in crypto assets, either in Bitcoin or BUSD. These cryptocurrencies delivered as collateral of the loan, will be frozen for as long as you use the Tether at Binance Futures to carry out operations.
When you want to recover your cryptocurrencies, all you have to do is reverse the operation, recovering all of your crypto assets. Allowing you to trade in the future contract market, without the need to exchange your Bitcoin for Tether at any time.
How do collaterals benefit users?
Now, once this has been explained, it is worth asking: what is the point of performing this operation? In Binance’s case, the reason for cross collateraling is straightforward.
Well, this opens the doors for users who want to trade with future contracts on Bitcoin, but do not want to exchange their crypto assets for Tether, to do so.
Thus expanding the number of users participating in your platform. And, therefore, the profits obtained by the exchange for the operations carried out in Binance Futures. Which will allow you to increase your already great influence on that market.
For its part, as we already mentioned, users can thereby participate in the futures market without having to exchange their cryptocurrencies for stablecoins. Which in practical terms means that users of the exchange will be able to “Capitalize on short-term price movements without selling your BTC at a committed price”
And the success of this mechanism has already begun to be noticed, with a total of 16 million Tether having been loaned so far, equivalent to that same figure in dollars. With a constant growth in the interest of users of cross-collateral, and therefore an expansion in the Binance futures market that will continue to increase in the coming months.