Rabbit M Overview
Following leveraged yield farming, Rabbit Finance will introduce a major update of the project, Rabbit Finance V2, together with a new family member, Rabbit M, which will not only enrich the whole ecosystem by providing a risk hedging tool for leveraged farmers but also offer a decentralized and reliable margin trading tool for traders.
We will analyze Rabbit M of Rabbit Finance V2 in detail from the perspective of product design and gameplay.

Functions and UI

The first version of Rabbit M will support 3 assets as BTC/ETH/BNB, allowing traders to borrow funds from the Bank on margin to short or long target assets.
The demo design is shown below:
Similar to leveraged yield farming, traders provide principal (margin) and borrow funds from Bank, entrusting strategic contracts to execute transactions through DEX by buying /selling target assets. Take long ETH as an example, the process of margin trading is as follows:
1. Traders provide principal in ETH and borrow USDT from the Bank
2. The strategic contract swaps USDT into ETH
3. ETH price fluctuates and rises up
4. Close position (sell ETH/pay the debt and interest to the Bank / get back principal + long gains)
Simply put, when price of ETH is 3000 USDT, traders:
    Provide 1 ETH as principal, choose 3x leverage to long ETH, borrow 6000 USDT to buy 2 ETH, that is, 3x long ETH.
    Provide 3000 USDT as principal, choose 3x leverage to short ETH, borrow 2 ETH to sell 6000 USDT, that is, 3x short ETH.

2. Use case

We will use a simple case to show the process of Rabbit M:
Steven is a trader, he predicts BTC is about to rise while the current price of BTC is 50,000 USDT. Steven plans to provide 1 BTC as principal and open a long position with 3 times leverage.
Steven chooses margin on 1 BTC and 3 times leverage on the setting page. The contract will then borrow 100,000 USDT from Bank of Rabbit Finance, and swap 100,000 USDT into 2 BTC. At this time, the trading is completed, and Steven's position of about 3 BTC will be entrusted to the vault contract of Rabbit Finance.
A few days later, BTC surges to 60,000 USDT, Steven decides to close position and receive about 80,000 USDT. The profit is about 30,000 BUSD to long BTC.
In the opposite instance, if BTC drops to 40,000 USDT, Steven closes the position and gets about 20,000 USDT. The loss is about 30,000 BUSD to long BTC.
Tips: In order to simplify the case, costs such as borrowing interests and trading fees are not considered. when Steven short BTC, vice versa.

3. Rates and incentives

Traders carry out margin trading by borrowing funds from the Bank on margin and entrusting strategic contracts to actually buy or sell target assets. Only a small amount of borrowing interest needs to be paid to win leveraged time gains by short or long target assets and RABBIT rewards in this process.
Costs and rewards of Margin Trading include: borrowing interest of the Bank, DEX trading fee , Margin Trading fee and RABBIT rewards. The relevant details are as follows:
1. Traders can do either long or short positions. Open/close positions are charged only once, no more than 0.2% of the position value.
2. RABBIT rewards will be distributed to traders, the longer positions are held, the more rewards will be received.

4. Future plans

The first version of Rabbit M on Rabbit Finance V2 will support 3 assets as BTC/ETH/BNB, and subsequent version will update mainly in the following 4 aspects:
a. More target assets supporting - allowing to long/short more target assets.
b. Optimizing liquidity - integration of more DEXs to provide better and deeper liquidity.
c. Increasing leverage times - providing higher leverage for assets with good liquidity.
d. Empowering RABBIT - supporting deductions of trading fees with RABBIT or discount according to holding/lock-up amount of RABBIT.
For more Rabbit M upgrade news, please pay attention to subsequent announcements.
Last modified 1mo ago