Crypto exchange Binance has announced updates to the collateral ratio of several crypto assets to enhance the trading experience for users. The update will affect crypto such as popular meme coins PEPE, BONK, and BANANA, among others. Due to the risk of liquidation, crypto users usually avoid under-collateralization in most cases.
Binance Update Collateral Ratio
The largest exchange by trading volume has announced key updates to the collateral ratio for traders. In a July 29 release, Binance announced the new ratio expected to change how users trade and borrow assets under portfolio margin. The move increases the ratio for eight crypto assets.
“Fellow Binancians, Binance will update the collateral ratio for the following assets under Portfolio Margin from 2024-07-30 06:00 (UTC). The update will be completed within approximately one hour.”
Meme coin PEPE will see an increase from 60% to 75% NOT will also soar from 40% to 75%. Other assets collateral ratios updated to 75% include NEAR and BONK. The rest on the list had their collateral ratio increased to 50% from lesser positions. BANANA and BB moved from 10% for that mark while ZRO and IO were raised from 30%.
Binance added that the newly increased collateral ratio will affect the Unified Maintenance Margin Ratio (uniMMR). As a result, users are to monitor the ratio due to liquidation losses that might occur from the change in collateral ratio. Traders await potential impact on the crypto market based on recent changes.
Also Read: Peter Schiff Decodes ‘Flawed’ Logic of Bitcoin Going To Millions Per Coin
Collateral Ratio and Liquidations
Crypto trading and decentralized finance (DeFi) often use collateral ratios to guide under or over-collateralize a loan or trade position. It is calculated by Total Collateral Value/ Total Borrowed Value.
Looking at fluctuations in the market, users over-collateralize to place them in a safe trading position. A drop in the ratio can spark liquidations of trade positions so the move protects both parties. The value of the ratio can drop based on fluctuations in the underlying asset’s price.
Also Read: Ex-SEC Reveals New SEC Leadership Impact on Ripple Case, Crypto Lawsuits
The post Binance Makes Key Announcement On PEPE, BONK & 6 Other Crypto appeared first on CoinGape.
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