Spot & Margin Trading
Mars Protocol supports two primary modes of trading: Spot Trading and Margin Trading.
These functions are unified within the Credit Account system, allowing users to interact with the protocol in a capital-efficient and user-friendly way.
Spot Trading
Spot Trading on Mars refers to the direct exchange of one asset for another using the funds already available in a user's Credit Account. It does not involve leverage, borrowing, or margin mechanics.
Users simply swap an asset (e.g., USDC for ATOM) at the current market rate.
All trades are executed through integrated decentralized exchanges (DEXs).
No risk of liquidation exists, as the trade only involves assets the user already owns.
This mechanism mirrors conventional DEX trading but benefits from Mars’ unified collateral model and smooth interface.
Margin Trading
Margin Trading enables users to trade with leverage—meaning they can take on positions larger than their current account balance by borrowing additional assets from the Mars money market (Red Bank).
For example:
A user with 100 USDC in their Credit Account may open a 500 USDC position on ATOM by borrowing 400 USDC.
This leveraged exposure amplifies both potential profits and potential losses.
Why Mars is Different
Traditional DeFi platforms often require a multi-step "looping" strategy to achieve leverage:
Deposit collateral
Borrow a second asset
Swap the borrowed asset
Repeat to compound leverage
This approach is:
Capital-inefficient, locking up additional assets with each loop
Gas-intensive and requires manual, error-prone steps
Mars Protocol introduces a superior model:
Capital Efficiency & UX Advantages
One-Click Leverage Margin trades are executed in a single transaction, with collateral, borrowing, and swapping handled atomically.
Unified Credit Accounts All assets deposited into a Credit Account act as cross-collateral, maximizing margin availability without requiring asset segregation.
Seamless Protocol Integration No interaction with multiple contracts or external protocols is needed. Users engage in leveraged trading directly within the Mars interface.
Understanding Leverage Risk
While margin trading offers significant upside, it also introduces elevated risk, particularly liquidation risk.
Liquidation Risk
If the value of your collateral falls too far relative to your borrowed position, your Credit Account can be liquidated:
Liquidation is triggered when the health factor of the account falls to 1.0 or below.
Mars Protocol provides an estimated liquidation price for each position, helping users manage risk proactively.
Liquidation Price Dynamics
In simple accounts (e.g., one leveraged position, stablecoin debt), the liquidation price estimate is reliable.
However, liquidation prices can become more dynamic under the following conditions:
The account holds multiple positions
The borrowed asset is volatile, not a stablecoin
Other collateral or debt assets fluctuate significantly in price
In these scenarios, small market movements can shift liquidation thresholds unpredictably. Thus, regular monitoring of account health and conservative leverage are strongly advised.
Summary
Feature
Spot Trading
Margin Trading
Execution
Swap at market price
One-click margin execution
Risk
None (self-funded)
Subject to liquidation
Use Case
Simple asset exchange
Amplified exposure via borrowed funds
Collateral
Funds in Credit Account
All whitelisted assets in the Credit Account
Spot and Margin Trading on Mars Protocol are unified through a capital-efficient, user-friendly framework that simplifies DeFi trading while expanding access to advanced strategies—without compromising transparency or risk controls.
Tutorial
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