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Single Currency Multi-Leg
Like an Interest Rate Swap, but not
Trading on Infinity is a fully-funded experience, meaning that for each Lend or Borrow trade, one will either provide or receive the principal amount accordingly. Separate to one-off trades, there are a number of reasons you may want to enter into multiple trades (often called 'legs') concurrently or sequentially.
For example, borrowing in crypto has, until recently, predominantly been on a floating rate basis. Floating rates are volatile by nature exposing borrowers to both uncertainty and high interest rates should the floating rates rise. To protect or hedge this risk, floating-rate borrowers can effectively turn your floating-rate borrowing position into a fixed rate borrow position by:
- Lending your proceeds on a floating-rate basis, and
- Borrowing on a fixed rate basis
On the flip side, Ethereum validators earn floating-rate yields which, similarly, are volatile and do not provide any certainty of returns. Such validators can turn your floating-rate return into a fixed-rate return by:
- Borrowing on a floating-rate basis, and
- Lending on a fixed-rate basis
In each of the above examples, if the two trades are executed simultaneously across different maturity dates, then there is in effect no net principal exchange - such trades are called Swaps, or more specifically, Interest Rate Swaps.
Infinity does not however provide the ability to execute multiple legs simultaneously without principal exchange. However with the Mutli-Leg experience, you may simultaneously enter into Market or Limit orders that will be executed sequentially.