Aevo, a decentralized derivatives exchange built on Ethereum, has launched a new product called 'Aevo Degen' that offers traders the option to use up to 1000x leverage on tokenized stocks.
Overview of Aevo Degen
The Aevo Degen product was launched on July 8 and currently supports stocks such as Coinbase (COIN), Robinhood (HOOD), MicroStrategy (MSTR), and Circle (CRCL), with more stocks expected to be added. Trades are available only during U.S. stock market hours, and all positions are automatically closed at the end of each trading day.
Trading Mechanism
By allowing traders with small capital to make large directional bets, the product is designed for short-term, high-risk trading. The 1000x leverage enables a trader to control a $100,000 position using just $100. However, this scale means that a single 0.1% move in the wrong direction can wipe out the entire position. Aevo uses an off-chain order book for fast execution, while trade settlement occurs on-chain using its layer 2 rollup.
Risks and Considerations
While Aevo states it has built a strong technical infrastructure, users must still manage risk carefully. The increasing interest in moving traditional financial products onto decentralized platforms raises questions about risk and regulation, especially with such high leverage involved.
The launch of Aevo Degen marks a significant step in the development of decentralized financial products; however, traders should be aware of high risks and be cautious about excessive leverage usage.
