MCDEX (Monte Carlo DEX) is a decentralized derivatives exchange for traders to long/short efficiently and securely, enabling leverage trading with max gain and loss.
After one-month testing of the alpha version, Now MCDEX Beta Version is available for everyone！
The official version will be launched in two weeks after finishing the audit process.
How does leverage work?
MCDEX is developed based on Mai Protocol, which supports trading Market Protocol Contracts in the first phase. Traditionally, leverage is achieved by borrowing, while we provide leverage by position tokens of derivatives with a Cap/Floor Price.
The token price is defined as follows:
Long Position Token Price = Entry Price - Floor PriceShort Position Token Price = Cap Price - Entry Price
For example, if you expect that the Bitcoin Price will rise, you buy 1 BTC of long position ($1000) when the Bitcoin price is $8000 with the Cap and Floor price of $10000 and $7000. If the Bitcoin price does rise to $9000, the long position price will rise to $2000 automatically. In this way, you are earning 100%(1000/1000)instead of 12.5%(8000/1000), with an 8X leverage.
How traders operate？
Mai protocol encapsulates the minting, exchange, and redeeming operations for position tokens and provides only two operations, Buy and Sell, to echo Market Protocol contract.
If the trader expects the underlying asset price to rise, he can enter the long position at the asset price by Buy operation. If the trader expects the underlying asset price to fall, then he can enter the short position by Sell operation. Besides, traders with long positions can decrease or close positions by Sell operation, and traders with short positions can decrease or close positions by Buy operation. In conclusion, we transfer every move into “buy” and “sell” operation, including closing the position.
The trader only needs to place an order, Mai Protocol automatically calculates the position token price corresponding to the price of the order.
Both the product design and layout aim to provide an intuitive and efficient user experience.
- Collateral fully locked in the smart contract
In centralized finance, the collateral is placed in the custody of a central operator, which leads to a potential risk that the operator may move the collateral to meet their own needs. However, in the decentralized space, all collateral is locked in the smart contract, which is unable to move by any entities. As a noncustodial exchange, MCDEX provides a secure solution to traders.
- No Margin Calls, No early settlement
Margin calls, which are challenging and systemically dangerous, are removed in MCDEX trading system by setting up price Cap and Floor.
Every Market Protocol contract sets Floor Price and Cap Price. The settlement price is the index price of the underlying asset upon expiration. Even if the index price rises above/falls below the Cap/Floor Price, the settlement price will still be the Cap/Floor Price. Thus, the position is fully collateralized, and the max loss is the initial margin. No margin calls are needed within the system.
Meanwhile, the Market Protocol contract is only settled after expiration. Before expiration, no matter what the index price is, the contract won’t be settled.
- No borrowing rates
Traditionally, leverage is realized by borrowing with interest rates; while in MCDEX, leverage comes with derivatives with a Cap/Floor price, which has no rates at all.
- Permissionless access without KYC
Through the introduction of the smart contract, the decentralized framework is able to avoid KYC requirements. Everyone is only tracked by the wallet address instead of their ID.
Our team, equipped with strong product and technology capabilities, devoted ourselves to building powerful decentralized trading platforms to reveal the power of DEX. There is still a long way to go, but we just take a first big leap. Next up, we will empower more synthetic assets with our platform and contribute more to the DeFi space with financial innovations.
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