FAQ
Most of the questions below were already answered and explained on their respective wiki pages! But for your convenience we also wrote answers to them in this page:

General Questions:

Why is margin trading with bZx better?

No KYC

Fulcrum is a decentralized margin trading platform. There is no need for any verification, KYC or AML.

Non-Custodial

Whether lending or trading, maintain control of your own keys and assets with our non-custodial solution.

Everything is Tokenized

iTokens (margin loans) earn holders interest on borrowed funds and pTokens (tokenized margin positions) allow your margin positions to be composable.

Minimal Liquidation Penalties

Positions that become undercollateralized are only liquidated enough to bring margin maintenance from 15% to 25%.

Perpetual Positions

Enjoy a frictionless trading experience with positions that automatically renew and zero rollover fees.

How safe is it?

Audited Smart Contracts

The base protocol has been successfully audited by leading blockchain security auditor ZK Labs.

Secure Oracles

Chainlink’s decentralized oracle network is used for price information.

Insurance Fund

If undercollateralized loans are not properly liquidated, lenders are repaid from a pool funded by 10% of the interest paid by borrowers.

Open source

As one of the founding principles of DeFi, we’re committed to interoperability and the development of open source code.

Are the smart contracts safe? Can I see the audits?

Yes. The base protocol audit is publicly available. All custody is retained by the base protocol. Both the base protocol audit and iToken/pToken audit were conducted by ZK Labs, a recognized leader in the space. Matthew DiFerrante, founder and lead auditor at ZK Labs, is a security engineer at the Ethereum Foundation and audits the Ethereum core protocol itself.

Trading Questions

How to open a leveraged position?

Select an asset, set your leverage, and go long or short

What does going long or short mean?

Margin trading has two main aspects: leverage and shorting. When trading with leverage, a trader borrows assets to increase the amount of assets they are trading. By doing so, they magnify the gains or losses of their trade. The borrowed assets are known as a margin loan. To obtain the margin loan, the trader puts up assets that serve as collateral. The terms of the margin loan specify a collateral-to-loan ratio. If the trade falls below the specified ratio, the trade is liquidated and the lender gets repaid using the trader's collateral. Margin trading also includes shorting. When shorting, a trader essentially sells assets they do not own. The short investor borrows an asset and sells it with the expectation that the asset will lose value.

Borrowing Questions

What are the fees involved when opening a loan on bZx?

When opening a loan there is a 0.09% origination fee on the principle. Interest is also paid for the life of the loan.

Can a loan be liquidated on bZx? How undercollaterized loans are liquidated?

Loan are liquidated if your position goes below margin maintenance. But only partially, enough to bring your margin up 10% above margin maintenance.

How are positions liquidated? Is there liquidity risk?

Positions are liquidated using KyberSwap. When a trader goes under margin maintenance (15%), they are only partially liquidated, bringing their current margin to 25%. Only liquidating as much as necessary reduces the risk of slippage from large liquidations. Anyone can initiate a margin call: the process is permissionless and incentivized. The incentive to liquidators is a refund of your gas * 2. There’s also no capital costs or risks like those experienced when liquidating positions on other protocols. This ensures redundancy in the margin calling process. Moreover, there is an insurance fund which protects lenders. In the case that a lender would lose their principal, the insurance fund will automatically disburse funds to the lender. This insurance is funded by a smart contract holding 10% of all interest that is paid by borrowers to lenders.
Last modified 3mo ago