Cryptocurrency trading platform Kraken has added Cardano (ADA) as a new forward collateral currency
Kraken Cryptocurrency Exchange announced that Cardano (ADA) is now supported as a collateral cryptocurrency on its futures platform.
It also supports cryptocurrencies such as Chainlink (LINK), Polkadot (DOT), Decentraland (MANA) and others.
The native token of one of the leading proof-of-stake protocols can now be used to gain exposure to dozens of cryptocurrency futures contracts. Kraken offers Single Collateral Futures and Multi-Collateral Futures. As the name suggests, the first type of futures contracts only allows users to use the base cryptocurrency of a certain pair as collateral. At the same time, the second type allows traders to deposit a multitude of cryptocurrencies as collateral, which means that they are not limited to the base currency. It should be noted that the ADA token has a “haircut” of 10%, which is a reduction in the value of the collateral margin. For example, if the balance is 1,000 ADA tokens, 900 ADA tokens count as collateral that can be used to back orders.
The size of the discount varies between different cryptocurrencies: from 0% for Bitcoin (BTC) to 50% for Avalanche (AVAX) and Tezos (XTZ).
Notably, users are not allowed to withdraw collateral currencies if their margin spot positions remain open.
In February 2019, Kraken acquired futures trading startup Crypto Facilities for an undisclosed sum of money. In July 2020, the subsidiary obtained a UK license.
In 2021, he paid a $1.25 million fine to the Commodity Futures Trading Commission (CFTC) after being accused of offering illegal margin-based crypto trading services.