We are committed to providing traders with greater flexibility and control, and are excited to announce a significant expansion of our margin guarantee options on Kraken Pro.
With this update, the number of collateral currencies you can use for margin trading increases from 23 to 38, providing a wider range of assets to integrate into your trading strategies.
What is a collateral currency?
A collateral currency can be a fiat, crypto, or stablecoin currency that you can use to trade on margin. Unlike standard spot trading, margin trading allows you to open long or short positions by borrowing funds directly from Kraken.
When trading on margin, Kraken’s margin pool is used for buying or selling the cryptocurrency, while your collateral secures margin extensions. The collateral currency you use does not need to match the trading pair of the order book you are trading on, allowing greater flexibility to go long or short in any trading pair with margin.
Note: Unstaked assets and Kraken Rewards can be used as margin collateral. However, assets held in Kraken Pro on-chain staking cannot be used as margin collateral.
Maximize the Benefits of Margin Trading
Expanding the range of collateral currencies allows traders in several ways:
- Diversification of guarantees: By using multiple collateral currencies, you can better manage risk and reduce exposure to the volatility of any asset. This is particularly useful for traders looking to protect their positions in unpredictable markets.
- Improved liquidity: With more eligible assets as collateral, you can free up funds for other trading opportunities while maintaining strong margin positions. This ensures that your portfolio remains active and responsive to market changes.
- Strategic flexibility: The ability to combine assets with different discounts allows you to fine-tune margin strategies, tailored to your risk tolerance and market outlook. Whether you prefer conservative or aggressive trading, extensive collateral options provide the adaptability you need.
- Hedging and Short Selling Opportunities: With access to margin trading and a diverse range of collateral currencies, traders can hedge their existing positions or take advantage of downward market movements through short selling. This opens up profit opportunities regardless of market direction.
- Leverage and capital efficiency: Margin trading allows you to amplify your purchasing power, allowing you to take positions larger than your available capital. This capital efficiency is further enhanced by the ability to use a wider range of collateral currencies, allowing you to maximize potential returns while optimizing resource allocation.
- Tax benefits: In some jurisdictions, using digital assets as collateral rather than selling them outright may defer taxable events. By leveraging collateral currencies for margin trading, traders can potentially reduce their immediate tax liabilities while maintaining exposure to their holdings.
New collateral currency choices
Here is the list of 15 new assets added to Kraken’s margin collateral lineup, bringing the total to 38 options.
| Active | Haircut |
| AAVE | 20% |
| DOGE | 20% |
| FTM | 30% |
| CLOSE | 30% |
| PAXG | 5% |
| PEPE | 30% |
| GIVE BACK | 30% |
| RUNE | 30% |
| SHIB | 30% |
| STX | 30% |
| ISU | 30% |
| TAO | 30% |
| Wi-Fi | 30% |
| XLM | 10% |
| XRP | 10% |
In addition to the above, we have also reduced the cup size for AVAX, XTZ and TRX from 50% to 30%.
Understanding Haircuts
When using a currency as collateral, Kraken applies a “haircut” to determine its effective value. This discount reflects the percentage reduction applied to the value of the asset to account for potential price volatility. For example, if you hold an asset worth $1,000 at a 20% discount, its collateral value is calculated at $800. This approach ensures greater stability and reduces the risk associated with using volatile assets as margin collateral.
What to keep in mind
It is important to note that collateral assets used to open margin positions cannot be exchanged for other currencies or withdrawn while the position is open. These assets remain reserved as collateral and are visible in your account balance, but they cannot be traded or withdrawn. You can check the availability of your collateral assets at any time via the Funding tab of your Kraken account.
The availability of margin trading services is subject to certain limitations and eligibility criteria. Margin trading carries an element of risk and may not be suitable for everyone. Read Kraken Margin Disclosure Statement to find out more.
Trade with caution. There is no guarantee that a limit order will be executed. There is no guarantee that the margin pool will be available at any time. There is also no guarantee that a market order will execute at a certain price. The availability and liquidity of the particular digital asset will impact these order types.
These materials are intended for general information purposes only and do not constitute investment advice or a recommendation or solicitation to buy, sell, stake or hold any crypto-asset or to engage in any trading strategy. specific trading. Kraken makes no representations or warranties of any kind, express or implied, as to the accuracy, completeness, timeliness, suitability or validity of this information and shall not be liable for any errors, omissions or delays. in this information or for any loss, injury or damage resulting from its display or use. Kraken does not and will not endeavor to increase or decrease the price of any particular cryptoasset it makes available. Some crypto products and markets are unregulated and you may not be protected by government compensation and/or regulatory protection programs. The unpredictable nature of crypto-asset markets can result in losses of funds. Tax may be payable on any returns and/or increases in the value of your cryptoassets and you should seek independent advice on your tax situation. Geographic restrictions may apply.
