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I just started getting along the fundamentals of DeFi and was planning to make a basic decentralised leverage trading platform. I have the confusion as to how the existing platforms(like dydx, DDEX etc) able to provide the leveraged amount to the margin position holders? Like what is their iniitial source of income which they are able to further use to provide leverage to the traders. Also, if I am to make a decentralised leverage trading platform with bare minimum functionalities, how would I be able to provide the leverage to the traders, if initially the platform starts from ground zero?

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There are lending pools that charge interest by lending their assets to the margin traders.

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    So the amount by which a certain margin can be leveraged is limited by the lending pool's current volume? – Anshu Jalan Jun 9 at 9:00
  • Yes. AFAIK all trades are fully collateralised, unlike in the legacy finance where leveraged traders are using credit lines. – Mikko Ohtamaa Jun 10 at 8:45

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