Comparison of Rabbit M Vs CEX

1. Comparison with CEX perpetual contract---no funding payments

Under normal circumstances, CEX perpetual contracts will trade based on index price which is calculated by weighted multi-platform trading prices. In order to force convergence between market price and the index price, the long/short trader is required to pay counterpart a funding fee to traders on the opposing side when the relative price deviates. Funding payments is charged generally every 8 hours, but will vary on different platform. No spot delivery or real asset transaction happens in the process, profit or loss depends on the power difference of counter parties on the platform.
Traders can borrow funds from Bank on margin to conduct margin trading on Rabbit Finance, the essentially difference from CEX perpetual is that traders are doing asset transactions based on liquidity pools of trading pairs on DEX. Trader buy or sell target assets with counterpart funds borrowed from Bank. there is no funding payments in the process.

2. Comparison with CEX spot margin trading-lower borrowing interest rate + lower trading fee rate

Margin Trading is a new application scenario for funds deposited in Bank of Rabbit Finance, which is a market-proven feasible lending and borrowing platform and funding solution in DeFi ecosystem.
2.1 Lower borrowing interest rates
Bank of Rabbit Finance supports lending and borrowing 14 kinds of assets at present, providing traders and farmers with sufficient funds and reasonable borrowing costs. The borrowing costs are extremely low compared with margin trading on CEX.
2.2 Lower Trading Fees
Margin Trading fee is charged by 0.1% of position value while DEX trading fee is 0.1%, the comprehensive fee rate is 0.2%.
    When traders open a position, the borrowing fund will be swapped into the other asset while comprehensive fee will be calculated basing on leverage times and no more than 0.2%.
    The first version of Margin Trading is based on Biswap, and trading fee rate is 0.1% of position value.
2.3 Additional RABBIT rewards
Traders holding long/short positions will get RABBIT rewards in addition. RABBIT rewards are allocated according to the proportion of positions and holding period, the longer positions are held, the more rewards will be received.

3. In case of small amount trading, the market depth is better

The first version of Margin Trading will support 3 assets such as BTCB/ETH/BNB. Later, more DEXs and varieties of assets will be provided. More assets options can be added conveniently based on the AMM pools of DEXs.
Under the AMM rule of DEX's pools, traders experience small slippages of market price fluctuating. With integration of more DEXs gradually, trading experience will be better and better.

4. Decentralized liquidation mechanism avoids price manipulation on CEX

Like leveraged yield farming, The "Gemini Liquidation System" is also applied to Margin Trading. In the event that your debt ratio has gone above the Kill Factor, that is to say, when the risk ratio of the position reaches 100%, your position will be liquidated by the liquidation bot. The specific rules are as follows:
During the position holding period, the oracle read and compare price from both DEX and CEX in a 1 minute time interval, it will be liquidated only if the next price verification from oracle also proves this position is qualified for liquidation. The two price verifications provide users with a time to add margin avoiding unnecessary losses.
Decentralized trading strategy and the "Gemini Liquidation System" provide traders with more transparent trading environment, which help traders avoid the occurrence of liquidation due to price manipulation on CEX and ensure the safety of traders' assets.
For more information about the "Gemini Liquidation System", please refer to the introduction below.
Last modified 1mo ago