Synthetix enabled multicollateral margin on its decentralized derivatives platform, making ETH the first non-stable asset to be accepted as collateral to trade perpetual contracts directly on Ethereum Mainnet. This allows users to deposit ETH as collateral and maintain their exposure to the asset while trading any available market, without the need to convert it to stablecoins.
The system operates through a unified multicollateral margin account where ETH and USDT work together. The value of ETH collateral is calculated using its real-time index price, with a standard risk discount applied to non-stable assets, known as a haircut. Positions are liquidated in USDT, so fees, funding, and PnL remain denominated in that currency. Should the USDT balance fall below the permitted threshold, Synthetix can automatically convert a portion of the ETH to maintain the account’s solvency.
Synthetix noted that access to ETH as collateral opens the door to over $100 billion in idle capital and improves the efficiency of strategies such as the basis trade, where the user deposits ETH, sells ETH perps of equal size, and builds a delta-neutral position to capture funding rates. The company anticipated that ETH will not be the only non-stable collateral available, and that yield-bearing assets will be among the next additions to the system.
Source:Â https://blog.synthetix.io/eth-multicollateral-margin/
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