Contemporary Challenges in On-Chain Trading

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  1. Liquidity Challenges: The challenge associated with on-chain trading primarily stems from low liquidity levels. Low liquidity can pave the way for price and funding manipulations, potentially causing forced liquidations. Consequently, market makers (MMs) often lack incentives to offer liquidity on-chain.

  2. Futures Trade Constraints: Conventional futures or perpetual contracts, these agreements can be traded in both long and short positions during their lifespan.

  3. Lending and borrowing: In the cryptocurrency space can indeed be challenging, whether on centralized exchanges (CEX) or decentralized exchanges (DEX). Such as: Collateral Requirements, Risk Assessment, Interest Rates, Liquidity and Regulatory Uncertainty.

  4. Manual trading: It requires traders to make all trading decisions themselves, understanding of technical and fundamental analysis, trading strategies, and risk management. Human emotions, such as fear and greed, can impact decision-making and lead to impulsive trades.

  5. Mining: Mining can be a challenging process for earning daily rewards over time. It requires graphic cards, significant electricity usage, and isn't very cost-effective.

  6. Single-Token Staking: Single token staking rewards refer to a staking mechanism where users stake a single type of cryptocurrency or token and earn rewards in the same token. This is a straightforward approach while Multi-Token staking is more challenging and lucrative for the community.

  7. Inflationary Model: Many projects in the cryptocurrency space operate on an inflationary model. Where new tokens are continuously created and added to the circulating supply over time.

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