The global cryptocurrency exchange Gemini, operated by the Winklevoss twins, has added a range of new assets to its derivatives market that can be used as cross-collateral. These include XRP, Shiba Inu (SHIB), Dogecoin 
$0.136431 (DOGE), Solana 
$139 (SOL), and Bitcoin Cash (BCH). Initially starting with only Bitcoin (BTC) 
$91,081 as a collateral option at the start of 2024, the platform has now broadened its system to support leveraged positions with various cryptocurrencies. This expansion allows for greater collateral flexibility, enabling investors to integrate idle cryptocurrencies into the system to generate additional capital. The inclusion of new cryptocurrencies will facilitate dynamic valuation of the collateral pool, ensuring the sustainability of all positions.
New Cryptocurrencies Officially Added to the Cross-Collateral Pool
Gemini’s announcement confirmed that investors can now deposit five new cryptocurrencies as collateral. Initially accepting only BTC, the platform has expanded its portfolio by listing high-liquidity assets like XRP, SHIB, DOGE, SOL, and BCH. The integration of these cryptocurrencies into the system has increased market depth and expanded the user base. The current market value of each cryptocurrency is instantly reflected in the collateral pool to determine the leverage ratio that can be obtained.
In practice, an investor can form a collateral of approximately $440 by holding a thousand DOGE (worth $226), one SOL (worth $183), and ten XRP (worth $31). The platform computes this total as “margin asset value” and uses it as a benchmark for maintaining open positions. This allows investors to finance their transactions with their existing assets without converting them to stablecoin.
Advantages and Risks of Cross-Collateral
The cross-collateral model allows users to combine multiple cryptocurrencies in the same pool. The system automatically calculates the necessary initial and maintenance margins based on the total dollar equivalent of the assets. Investors can open leveraged trades without having to liquidate different cryptocurrencies in their portfolios, eliminating the need for additional capital. This increases transaction speed and flexibility in the market.
However, leveraged trades carry high risks. If prices drop significantly, the platform may swiftly liquidate cryptocurrencies in the collateral pool to cover the loss. Instances like XRP’s 10% drop in a single day on July 24 illustrate how quickly collateral value can diminish. Therefore, Gemini advises diversifying collateral and using low leverage to mitigate risks. Otherwise, users might face the risk of losing their entire assets.
