Phoenix Exchange Adds SOL as Collateral for Perpetual Futures Trading

Phoenix, a perpetual futures exchange built on the Solana blockchain, has enabled SOL as a form of collateral for trading. The update allows users to post SOL as margin for positions across more than 80 markets, including crypto, equities, and commodities, alongside the existing USDC stablecoin option.

A New Option for SOL Holders

This development removes a significant step for traders who hold SOL and wish to trade on the platform. Previously, they were required to sell their SOL for a stablecoin like USDC to fund their margin accounts. Now, they can use their SOL holdings directly to back their trading positions.

"Traders on Solana today should not have to make the tradeoff between holding spot and trading perpetuals," said Eugene Chen, CEO of Ellipsis Labs, the development team behind Phoenix. "SOL collateral solves this tradeoff. A trader can stay long SOL, post it as margin, and run a basis trade or take a position in any Phoenix market without touching USDC."

How the System Works

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The new multicollateral system has specific parameters for how assets are valued and used. While profit and loss will continue to settle in USDC, the collateral itself can now be a mix of assets.

• Collateral Weight: SOL is valued at 80% of its market price for margin purposes, while USDC is counted at 100% of its value.
• Liquidation Process: If an account's margin falls below the required maintenance level, Phoenix's risk engine will first automatically reduce open positions. It will only sell the SOL collateral necessary to cover any remaining USDC shortfall.

Future Enhancements

According to Ellipsis Labs, SOL is the first of several assets planned for inclusion in the multicollateral system. The firm stated it expects to enable additional collateral types over time, guided by user demand. Each new asset will have its own specific oracle, weight, and liquidation parameters.