Last updated on：2019. July 29
Welcome to use Bit-Z margin trading service ("this service"). Before taking the next step, please read carefully and fully understand the terms described in the Bit-Z Margin Trading User Agreement ("this agreement"). Bit-Z platform has the right to modify or update this agreement without prior notification. Please check regularly to confirm that your interpretation of this agreement is accurate and up to date. By using Bit-Z margin trading service after we made a modification or update to this agreement, you accept the modified or updated agreement.
Section 1 Margin Trading Introduction
Margin trading refers to the practice of using borrowed funds from a broker to trade a financial asset, which forms the collateral for the loan from the broker. Such use of financial leverage can potentially magnify gains.
Margin trading is a form of currency trading with higher risks than ordinary currency trading. Please pay attention to control risks.
Bit-Z provides a convenient lending service for its users to take long or short leverage transactions. The maximum borrowing amount for a user is decided on several factors. Currently, Bit-Z supports up to a 3x margin.
Margin trading for the cryptocurrency is based on a trading pair, in which users can choose to long or short a single currency in the trading pair ("transaction currency" and "price currency" in a currency pair):
a. Long: For example, a trading pair that supports margin trading is A/B pair, if you want to long currency A relative to B, you will borrow currency B and use B to purchase A. When A's price rises to your ideal price, you can then sell A to get more B and pay back the amount of B you borrowed originally. After repaying your principal and borrowing interests, you will still be left with excess B as the profit for your long strategy;
b. Short: For example, a trading pair that supports margin trading is A/B pair, if you want to short currency A relative to B, you will borrow currency A and use A to purchase B. When A's price falls to your ideal price, you can then sell B to get more A and pay back the amount of A you borrowed originally. After repaying your principal and borrowing interests, you will still be left with excess A as the profit for your short strategy.
Section 2 Risk Management
For margin transactions, Bit-Z uses a "risk ratio" to manage risks and ensure user and platform asset security. To reduce the platform-specific risk, where the "risk ratio" is related to a single platform's prices only, Bit-Z takes the average proportional prices of several global cryptocurrency exchanges (denoted as "mark price") to calculate the "risk ratio".
Margin trading "risk ratio" is the debt ratio of a user's margin account portfolio. It is a critical risk measurement of a user's current margin trading transactions, and the formula is:
When risk ratio > 150%, assets in "margin account" can be transferred out partially; When risk ratio < 150% (including 150%), assets in "margin account" can only be traded but not transferred out.
When the risk ratio of ≤ 130% (warning status), the system will notify the user automatically through various methods.
When risk ratio ≤ 110% (liquidation status), forced liquidation will be triggered in this trading pair and loans will be repaid automatically (principal and interests). If a user has borrowed multiple times, loans will be repaired chronologically. If there is a remaining asset in the margin account after repaying the loans, 90% of the remaining asset will belong to the user and Bit-Z takes the rest 10% as the liquidation fee.
To protect platform users’ benefits, Bit-Z will collect part of interest generated from terminable currency loans as platform’s risk reserve fund, which is used for repaying platform users and borrowers’ remaining currency loan after auto liquidation when terminable currency loan margin trading has outstanding loss (refers to in the case of market volatility, the total asset of the user’s asset under “leverage asset” becomes negative after liquidation). Bit-Z reserves the right to use the risk reserve fund in other ways.
To meet the needs of different users, Bit-Z’s currency borrowing service has two types, terminable currency loans, and perpetual currency loans, and users can choose to enable the auto to renew when opting for terminable currency loans.
a. For users who choose terminable currency loans without enabling auto-renew, when loans become due, if users fail to repay the loan, balance of the borrowed currency of their “leverage asset” will be deduct to repay currency; if balance of the borrowed currency in their “leverage asset” fail to cover all the currency loans, asset of the corresponding currency pair in their “leverage asset” will be auto liquidated to repay currency; if still unable to pay the loans off, the platform will use risk reserve fund as disbursement to repay.
b. For users who choose terminable currency loans and enable the auto to renew, when loans become due, if the user hasn’t repaid currency, the platform will renew the loan with at the optional interest rate based on the number of outstanding loans and interest. During the process, users shall bear the risk of the interest rate change and currency loan increase which might decrease leverage risk ratio and in the end, lead to margin call or liquidation by themselves.
If the borrower is unable to repay the interest with the asset in the margin account, Bit-Z reserves the right to deduct directly from the balance of assets of the user's exchange assets, OTC account or wealth management account to repay debts. If the user cannot repay the debt fully, Bit-Z reserves the right to collect the debt from the user.
A prolonged period of insolvency may cause the account to be frozen.
In order to reduce the risk of investors, the borrowed currency does not participate in the distribution of candy, forked coins, airdrop rewards and other activities; but the principal part of the margin assets can participate in the above activities, and the proceeds will be distributed to the corresponding exchange accounts.
Section 3 Margin Borrowing Limit
Users can borrow a certain amount of price currency or transaction currency (assets borrowed) up to 3 times leverage according to their short or long strategies.
The maximum amount of tokens a user can borrow is calculated as followings:
a. Remaining max available base currency borrowings = (total assets in base currency + total assets in trading currency * mark price - outstanding base currency loan - outstanding trading currency loan * mark price - interests on base currency loan - interests on trading currency loan * mark price) * (max leverage multiplier - 1) - (outstanding base currency loan + outstanding trading currency loan * mark price);
b. Reamining max available trading currency borrowings = max available base currency borrowings/mark price
Section 4 Transfer of Assets between Margin Account and Exchange Account & Interests
Users need to transfer the assets under Bit-Z exchange account to their "margin account" to make margin transactions; the assets act as a margin for users to borrow assets.
Once the user clicked the "confirm" button on the margin borrowing page, Bit-Z platform will distribute the borrowed assets to the user's margin account and start to calculate interests given that there are enough assets to be loan out.
To reduce the interest burden for users, Bit-Z leverage takes an hourly interest, the calculation method is as follows:
The first hourly interest payment is calculated as soon as the user borrows tokens, after that, the remaining interests are calculated starting in every natural hour (if less than an hour will be counted as a full hour).
Interests are calculated as a simple interest rate; an hourly rate is 1/24 of a daily rate. Users can check on the daily spot interest rate each day on the platform. which don’t calculate the interest rate, only calculated by the amount of currency borrowed.
Interests are not compounded.
Section 5 Trading Agreement
By taking margin transactions using Bit-Z platform, users understand that they should abide by the applicable local laws and regulations as well as this user agreement, ensuring the source of the transaction funds to be legal and compliant. Bit-Z has the rights to frozen user accounts, cancel certain margin trading permissions, take over applicable debt, and force liquidation to manage risks and maintain cryptocurrency market stability.
By taking margin transactions using Bit-Z platform, users understand the risks related to margin trading and investing in digital assets and are responsible for managing their own risks.
Users agree that all investment transactions conducted on Bit-Z platform represent their true investment willingness and unconditionally accept the potential risks and benefits following their investment decisions.
Users understand the fees associated with margin trading and agree to pay the fees according to the rules published by Bit-Z.
By using Bit-Z margin trading services, users authorize Bit-Z to perform risk control operations such as liquidation and automatic repayment on user accounts in risk events (i.e. risk ratio ≤ 110%) and unconditionally accept any final transaction result.
While using margin trading service, users agree and authorize Bit-Z without reservation to automatically deduct balance of the borrowed currency in their “leverage asset” when they don’t repay their due currency loans; if fail to repay all, it will lead to auto liquidation of other assets in “leverage asset”; if auto liquidation still cannot cover the currency loan, risk reserve fund will be brought in as disbursement to pay off the loan.
Section 6 Risk Warning
Bit-Z provides information release, supervision and risk control services to margin account users and does not guarantee the performance of their margin trading activities. Users should understand that margin trading can have higher risks than the normal trading transactions without borrowing on margin and that users can lose all their investments. Please make investment decisions based on your risk tolerance and economic condition, and participate voluntarily on the basis of confirming the associated risks are controllable and affordable. Users need to be aware of the investment risks and manage their margin accounts accordingly to adjust risks. Users are responsible for all losses caused by account liquidation should the event happens.
Section 7 Others
This agreement is a subset of the Bit-Z "User Agreement" and has the same legal effect as the "User Agreement". Events and articles not mentioned in this agreement follow the rules in "User Agreement".
This agreement starts to take legal effects once the user clicked the "confirm to start margin trading transactions" button on Bit-Z margin trading page; the effects are applicable to both Bit-Z and the user.
Bit-Z reserves the right to modify, suspend or terminate the margin trading service at any time.
Bit-Z reserves the right of final interpretation of this agreement.