When Oasis Trade was released in October 2019, it represented the first step toward creating an all-in-one decentralized finance (DeFi) hub built on top of the Maker Protocol. With the launch of Multi-Collateral Dai (MCD) the following month, Oasis Borrow and Oasis Save were introduced to provide users with secure, simple ways to access Maker Vaults and the Dai Savings Rate (DSR).
Today, in its continual effort to realize the vision of an all-in-one DeFi hub, the Maker Foundation announces the release of Multiply on Oasis Trade. Multiply allows anyone to trade using Maker Vault-created leverage in just a couple of clicks.
Meet Multiply, the Newest Feature of Oasis Trade
With Multiply on Oasis Trade, ETH can be used as collateral to borrow Dai, which can then be used to buy more ETH, and so on, creating multiples of up to 2x. In this first release of Multiply, only the ETH collateral type can be used for trading. More collateral types will be added in the future.
Multiply, which is built on top of the Maker Protocol, allows users to borrow Dai and create Multiplied Positions, which are similar to leveraged or margin positions but without the need to borrow funds from a counterparty.
Overall, the approach to leveraged trading in Oasis differs from existing models because instead of traditional options, such as counterparties lending users traditional fiat money for assets (such as stocks), users access Dai by utilizing Vaults on the Maker Protocol. A user deposits collateral in a Vault to self-generate Dai as a funding source to purchase more collateral, multiplying their exposure to the asset.
Given the current collateral parameters on the Maker Protocol, ETH has a minimum collateralization ratio of 150%. This means that a user could conceivably create up to a 3x Multiplied Position, if done manually through Oasis Borrow, for instance. With Multiply, however, a user is restricted to an initial minimum “safe” collateralization ratio of 200%, which limits the user to a maximum 2x Multiplied Position when first opening a Vault.
The multiple ratio is calculated as the proportion of the assets’ value to equity value (i.e., assets minus debt), and the assets and equity are priced according to the buy-side valuation on the OasisDEX orderbook (i.e., the amount of Dai one could sell their assets for on OasisDEX).
How to Trade Using Multiply
The first version of Multiply on Oasis Trade is intended for use by experienced traders, who understand traditional leveraged trading, trading terminology, and the overall technical and trading flows. Traders should be aware that with each Multiply account, a user will have a set liquidation price. For complete details, read the comprehensive Multiply User Guide and the Oasis Terms of Service.
Example of a 1.5X Multiple Trade
If a user wants to begin Multiply trading with the ETH/Dai pair to create a 1.5X multiple trade, they can start with either WETH or Dai. Starting with Dai, the user can deposit 10,000 Dai into their Multiply Account. The user can then place a Buy Order for 150 ETH (assuming the price of ETH is 100 Dai), which would sell the 10,000 Dai for 100 ETH, lock the 100 ETH into their Multiply Position, and draw 5,000 Dai against it, which is then sold for an additional 50 ETH. The user now has a 1.5x multiple of their initial investment.
The user can also start with 100 ETH, depositing it into their Multiply Account, and using it to lock into their Multiply Position, drawing 5,000 Dai as before and then selling this for ETH. Both of these methods would involve just two transactions, depositing and then placing the Buy Order, taking them to the 1.5x multiple.
Liquidations in Multiply Trading
Liquidation of a Maker Vault in the Maker Protocol occurs via automated auctions when the value of collateral in a Vault falls below the Liquidation Ratio. Collateral is auctioned in order to cover the amount of Dai that a user has generated from their Vault.
Within Oasis Multiply, liquidations work the same way, because the Multiplied Positions are created using Maker Vaults in the background. Therefore, a Multiply Position can be liquidated if the price of collateral (the market price) falls below the user’s liquidation price. When this occurs, the position enters the liquidation phase, and a collateral auction can be initiated at any time. During this process, the system sells Vault collateral through open auctions to cover the debt, stability fee and a Liquidation Penalty. If there is any remaining collateral after the auction(s) end, it is available to be reclaimed by the user.
Starting today, anyone can use Oasis Trade to open a Multiply Position on the ETHDAI market and create long ETH Multiples in just a few clicks. Over the next few months, more assets will become available for Multiply trading, and new features, such as P&L tracking, will be added.
To ask questions, provide feedback, or request new features, please reach out on the Oasis Chat channel.