Ever since the creation of cryptocurrency, many individuals and companies have embraced the power that crypto has to bring financial services to people who never had access to them before. The phrase “banking the unbanked” has become so commonplace in the cryptosphere that it’s practically an old song sung again and again seemingly to remind us all that crypto can change the world.
But it isn’t just about storing and sending money–cryptocurrency has opened up the world of investing in a way that it has never been opened before. Through ICOs, IEOs, and STOs, companies are able to reach entirely new capital markets; investors who would have been turned away at the door for IPOs are now welcomed in droves.
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Still, there are some aspects of crypto investing that have remained either out-of-reach or too risky for the average retail investor to engage in. One of these is margin trading, which Binance describes as “a method of trading assets using funds provided by a third party… [that permits] traders to access greater sums of capital, allowing them to leverage their positions.”
But there are some actors within the crypto space working to bring crypto margin trading within the reach of a whole new group of investors. One of these is DX.Exchange, an Estonia-based cryptocurrency exchange that recently launched a new kind of tokenized margin trading.
Since DX.Exchange launched in January of this year, the company has received quite a bit of attention for the products that it offers–notably, the exchange began offering tokenized stock trading options as soon as its platform was open.
Additionally, the exchange partnered with Marketplace Securities in March to begin offering tokenized exchange-traded funds (ETFs). The same month, DX.Exchange opened up an STO platform.
Most recently, DX.Exchange has begun offering what its operators call “Smart Leverage Tokens” (SLTs) or, more colloquially, “Turbo Tokens.”
We interviewed Daniel Skowronski, CEO and co-founder of DX.Exchange, about the launch of Turbo Tokens and the exchange’s future plans for them. Skowronski also gave us a hands-on trading demo. To listen to the full interview and learn how to trade SLTs on DX.Exchange, click ‘play’ on the Youtube video below.
How do Turbo Tokens work?
According to the official announcement of the product’s launch, SLTs are “a decentralized index enabling trading on margin without any lending, high fees, or complex products. Like traditional leverage, they offer the potential for gains at multiples above the price changes of the underlying asset.”
The key difference between SLTs and other kinds of leveraged trading products has to do with risk exposure: “with current leveraged products, the trader borrows margin from the exchange,” the announcement explains. “Borrowed margin increases risk exposure for the exchange and incurs overnight interest charges for the trader.”
Instead, “the trader owns their leverage, and therefore also bears any risk,” reads the announcement. “These leveraged tradable assets will track the price changes second by second, enabling traders to go long or short against the underlying cryptocurrency.”
Here is a new update about the https://t.co/gavrewTi9F trading platform technical upgrades, SLT’s or Turbo Token launch and DXCash going live. Check it out at https://t.co/yclSWkUrVm #exchangeyourway pic.twitter.com/KyFrdezVfr
— DX.Exchange (@DXdotExchange) August 1, 2019
Skowronski explained Turbo Tokens to us this way: “everybody is kind of really excited about margin trading today. And they’re adding crypto CFD trading; they’re adding regular, standard margin trading,” Skowronski said. “What we’ve done is created [SLTs] on the Ethereum blockchain where we’ve actually put the leverage inside the token.”
“So, we do a 5x or 10x on this token.. which can track the underlying asset,” he said. “So in the case of, say, Bitcoin–if Bitcoin moves X number of percent, tick-by-tick, the [corresponding] Turbo Token would move 10-times or 5-times that percentage move.”
“It’s not just for DX–it’s basically for any exchange that wants to have margin trading of tokens.”
According to the Turbo Tokens product announcement, the SLTs are “paired against USDT or DXCASH (the native utility token of DX.Exchange,) including BTC, ETH, XRP, ADA, and BNB. Leverage will be 5x against USDT pairs and 10x against DXCASH token pairs.”
Skowronski explained that the currencies that were picked to be included in the SLT offerings were chosen because of their popularity. “So, obviously, there’s Bitcoin–you can buy the token long or you can buy the token short. Ethereum, the same; we [also] picked Cardano, XRP, and BNB Token for now. But we could pretty much do this on any token if we wanted to.”
And indeed, Skowronski said that there are plans to eventually launch a wider variety of cryptocurrencies as SLTs. “What we’re doing is listening to the community and other exchanges–these tokens are not just limited to DX, we’re actually going to be launching these tokens on other exchanges around the world, big ones, and small ones.”
“Like I said, it’s a new category of product,” he continued. “It’s not just for DX–it’s basically for any exchange that wants to have margin trading of tokens.”
“One good thing about this is for an exchange that doesn’t have margin trading [is that] they don’t actually have to go and purchase a whole margin system; they don’t have to do any integration, they don’t have to do any reporting changes, they don’t have to worry about risk management–all of it– any more.”
“They can just simply add a token,” he said. “And today, an ERC20 token can take under an hour to integrate into a platform.”
“It’s basically exceeded our expectations.”
So, how have things been going since the product was launched last month?
“It’s basically exceeded our expectations,” Skowronski said. “We launched it first on a 10x under DXCash, which is our native cryptocurrency token on the exchange. So, anyone who had DXCash holdings had first access to this product.”
Since then, “the response has been tremendous,” he continued. “Our volume on the exchange–in the last three and a half weeks, since [SLTs] have been live–over 50% of the volume is based on this token alone now.”
“People really, really love it because it’s really moving,” Skowronski said. “I think it’s kind of bringing back 2017 again when tokens were moving a minimum of 5 to 10 percent a day but could be as much as 40 or 50 percent a day. That’s what the crypto community really likes, and it’s what they’re really after.”
“That’s why a lot of other exchanges have already reached out to us, and we’re getting ready to list these on other exchanges–because, again, they see the innovation. And, look, exchanges–they make money when there’s turnover, right? And these tokens have a high daily turnover because people are trading in and out all day long because they’re moving.”
“Even in the last week–Bitcoin has been stuck between $9500 and $10,500. So it’s not a big range. But the movement on the Turbo Tokens has been anywhere from 5-10x that. So, even in a quiet market like this, you really get nice moves and an opportunity to make money.”
This was an excerpt. To hear the rest of the interview, click the Soundcloud link. To see the live trading demo, click the Youtube link.