Derivadex should allow users to deposit $ETH as a collateral type in an addition to existing stable coin collateral types.
Some arguments in favor of this change:
- Traders are increasingly becoming accustomed to being able to use ether as a collateral option due to the rise of perpetual protocols such as GMX.
- Supporting ETH as collateral allows traders to interact with the exchange without converting their ether tokens into USDC, or USDT.
- Many jurisdictions consider such a conversion (ETH->USDC) a taxable event, which increases friction between users and the Derivadex exchange. We should always try to reduce as much friction as possible between traders and the exchange.
- Enabling $ETH as collateral would allow people to make deposits with ETH and pay the deposit gas fee in a single transaction. The cost of gas could be deducted from the amount deposited. This reduces further friction to using the exchange.
- This could introduce more volatility/liquidations in the exchange
This change would require several technical upgrades, such as the gas fee deduction mechanic, supporting ETH as a collateral type on the exchange, supporting ETH as a stop-gap in the insurance fund, and so forth.
Would appreciate community feedback on this idea. Would you support it? Why or why not?