Leveraged trading

We know that in traditional decentralized lending platforms, users can collateralize their assets to borrow and buy or sell BTC to achieve the purpose of shorting or going long on Bitcoin. For example:

Users holding BTC can deposit BTC, borrow USDC, then use USDC to purchase more BTC and deposit the newly acquired BTC back to borrow more USDC. By repeating this process, they can hold more BTC, which is essentially going long on BTC.

Similarly, users holding USDC can deposit USDC, borrow BTC, sell the borrowed BTC, and deposit the acquired USDC back to borrow more BTC. Repeating this process allows users to short BTC.

This method not only wastes users' time but also requires a significant amount of gas fees. To solve this pain point, zkfox allows users to collateralize a certain amount of tokens to directly go 2x or 3x long or short on BTC.

For example, if a user holds $1000 worth of USDC and wants to go 2x long on BTC, they can collateralize $1000 worth of USDC. The platform will help users borrow another $1000 and purchase $2000 worth of BTC. If the BTC price increases, the user profits; if the BTC price falls, the user suffers a loss. If the BTC value drops below $1200, liquidation may be triggered, and after repaying the borrowed $1000 in USDC, the remaining value will be returned to the user.

If a user holds $1000 worth of USDC and wants to short BTC, they can collateralize $1000 worth of USDC. The platform will help users borrow $2000 worth of BTC and sell it for USDC. When the BTC price falls, the user profits; if the BTC price rises and the USDC value is close to not being able to cover the borrowed BTC value, liquidation is triggered. The platform will buy back BTC to repay the debt and return the remaining USDC to the user.