Borrow tokens & Leverage LPs
Borrowers must deposit LP tokens as collateral (see here on how to provide liquidity and get LP tokens) before borrowing any tokens. This will deposit the LP tokens into the farm, and all earned rewards will be auto-compounded to create more LPs as yield. Borrowers can either manually borrow single tokens or use the "Leverage" button, which enables the platform to automatically borrow the two underlying assets to create LP tokens and amplify the investor's LP farming position. This results in increased farming rewards and more LPs autocompounded.
Since LP leveraging involves borrowing, the leveraging investor must take note of their loans' borrow APRs, which can vary depending on the utilization of the supply pools. The LP leveraging is also subject to a liquidation range. When the impermanent loss becomes too high on either side, the leverage position will be at risk for liquidation. As with all leveraging, this is a higher maintenance strategy that requires regular management to ensure success.
How to leverage LPs:
1. View the markets page and choose a vault with your desired LP and APR.
2. Click on the vault, and under the "Borrowing" tab, find the row with the LP pair and the "Deposit" button.
* If you do not already have the LP tokens, go to the Liquidity page and deposit your tokens into the liquidity pool.
3. Click "Deposit," and make the necessary Approval transaction, if needed.
4. Choose the amount you wish to deposit, and finalize with "Deposit."
5. You can manually borrow single tokens or allow the platform to automatically borrow and create LPs for you.
a. Borrow single tokens: Find the row for the token you wish to borrow, and click "Borrow." Enter the amount or use the slider.
b. Leverage through the platform: Click "Leverage," and a leverage interface window will pop up. You can input a leverage amount or use the slider, and the interface will display all the information you need to know.
* You can only borrow/leverage as much as there is available supply. If the utilization for any one of the tokens is high, leverage capability will be limited until more supply is available.
6. Choose a leverage you're comfortable with, make the necessary Approvals as needed, and click "Leverage."
7. Voila! You are officially leveraged.
The interface will display all the information you need and will change regularly depending on market movement and price changes, so make sure to check up on it regularly as well.
From here, you can leverage more, partially deleverage, or fully deleverage. The interface will adjust with the necessary information accordingly.
How to deleverage:
1. To deleverage or derisk, you can manually repay any of the single assets or click "Deleverage."
a. Repay loan for single tokens: Find the row for the token you wish to repay, and click "Repay." Enter the amount or use the slider.
b. Deleverage through the platform: Click "Deleverage," and an interface window will pop up. You can input a deleverage amount or use the slider.
2. Make the necessary Approval transactions, if needed, and finalize your transaction.
3. Make sure you have no outstanding loans. In the event of a full deleverage via the platform, if impermanent loss of your LP was high, the repay process may have left one of your loans incompletely paid. Repay the outstanding amount, and you will be able to withdraw the remaining balance of your LPs.