- XRP added to Gemini’s collateral list for derivatives trading.
- Traders can now use SHIB, DOGE, SOL, BCH as collateral.
- Volatile tokens like XRP pose liquidation risks during market drops.
The cryptocurrency trading platform Gemini has expanded its cross-collateral features by adding XRP to the list of supported digital assets. The update also includes Shiba Inu (SHIB), Dogecoin (DOGE), Solana (SOL), and Bitcoin Cash (BCH), giving users more flexibility when trading derivatives.
Previously, Gemini only allowed Bitcoin (BTC) to be used as collateral for derivatives trading. With the most recent update, one can mix and match several cryptocurrencies and create a collateral pool. In this sense, XRP and other newly listed altcoins can be utilized to back open and leveraged positions.
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The cross-collateral functionality has allowed traders to utilize their unutilized digital assets. Users can combine tokens to support their trades instead of using only stablecoins. Gemini charges a margin value according to the total value of all the assets that their account can use.
For instance, a user holding 1,000 DOGE valued at $226, 1 SOL worth $183, and 10 XRP priced at $31 would have a total collateral of about $440. This can be used to open or keep derivatives positions on the platform.
Gemini Users Face New Opportunities and Risks With Altcoin Collateral
Allowing XRP and other altcoins as collateral introduces more opportunities but also brings new risks. These tokens’ prices are volatile, as demonstrated on July 24, when XRP declined by approximately 10 percent during a rapid sell-off.
In case of adverse market movement, users face the threat of liquidation. Through an automatic mechanism, Gemini can sell collateral to cover the losses; this may lead to total loss of the applied assets. Thus, risk management is critical when trading high-volatility tokens.
Users are advised to diversify their collateral and avoid overleveraging to cushion the risk of possible losses. Portfolio diversification may be beneficial in the case of a price shock.
By topping the new collateral list, XRP now offers its holders added utility within Gemini’s trading system. The update marks a notable shift in the platform’s approach to derivatives trading.
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