Do Trading and investing involve risk? Apparently, yes. The cryptocurrency market is not an exception. Bitcoin and other cryptocurrencies not only go up, but also down, and whatever rises, also falls. Risk and volatility will always be there. Fortunately, there is a way to protect yourself while trading and investing, and one of the ways is through hedging your crypto positions.

In a more simple language, hedging is like buying insurance for your car. If you crash your car, insurance will pay for it, thus reducing the risk of financial damages for you. The same is true with trading cryptocurrencies. You believe they are in an uptrend and the market will rise? Great, but you are afraid of short-term volatility and a fall in value in the upcoming weeks or months. Is there a way to protect yourself against it?

How does hedging on ProSwap work?
Yes, you can hedge your position on ProSwap. ProSwap is a decentralized marketplace connecting those who want to buy a hedge or sell one. If you have a position in Bitcoin, Ethereum, or any other crypto, and you want to protect it against a drop in price, you can simply pledge your cryptocurrency into a ProSwap hedge contract for the amount and period of time you choose. For the benefit of that protection, you pay a small fee to the person on the other end of the contract.

There will always be somebody on the other side of your trade who believes that the crypto market will be steady for a while, and they would be willing to pledge their coins (USDT) into the same contract. Your counterpart immediately receives the small cash you deposited as a risk premium, the contract is activated and you are fully hedged. When the expiry date comes you can either take back your Bitcoins (or other cryptocurrencies) or take USDT. The remaining party will receive what is left.
That’s it, you now know how to hedge against crypto market risk and volatility with ProSwap.
Visit us and learn how hedging works first-hand.
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