Why use Impermax?

There are two main reasons to use Impermax; leveraging your LP (liquidity pair) and supplying (lending) your crypto to others who will borrow it to leverage their LP’s.

Leverage:

Impermax allows users to borrow crypto other users supply to liquidity pairs. Using an example market of ETH/USDT on Arbitrum, let’s take a look at how leveraging an LP works in practice.

In V3 markets on Impermax, just like with any other LP on a dex, you can deposit a roughly 50/50 split of LP. Unlike other dexes, especially other dexes that offer leveraged farming, you can additionally choose which price range per asset you want to actively use for leveraged APR farming which can dramatically impact how much you earn. In older V2 markets on Impermax, you cannot adjust the price range for farming.

On Impermax, you never have to leave their dApp to deposit and manage your LP on underlying exchanges Impermax partners with.

In this screenshot, I will show you how to create a LP position in this ETH/USDT pool:

In V3 pools on Impermax, you pay fees to leverage your LP positions and can choose which fee levels you would like to participate in. For the ETH/USDT Arbitrum pool, it’s fantastic with low fees (0.05%) and deep liquidity (over $10 million TVL!) because of the Uniswap V3 partner pool that feeds the Impermax leverage fees.

When you’ve decided on the active price range you’d like to set for leverage farming, click on “Next Step” and you will choose how much you’d like to borrow increase your leveraged APR farming.

It’s important at this stage to take note of your health range on your loans. You DO have to repay what you borrow for leverage to close your position and the health range on your loans gives you a helpful visual reminder of how close you are to being liquidated or under water on your position.

Let’s look at a live example of what managing a leveraged LP position looks like →

This example is from earlier today (1.4.2025) and shows 3 separate opened positions all in the ETH/USDC arbitrum pool. In Impermax V3, you cannot add to your underlying deposit once it’s live, you can only reduce your leverage or borrow more. In the above example, the user chose 3 different price ranges and leverage amounts.

Notice the "***Net Balance”***portion under each position. As prices of underlying assets within an LP differ, impermanent loss and the cost to borrow each respective asset likely will change your deposited LP.

When net balances are positive for both assets, a LP position can be closed and the underlying assets plus accrued APR in the form of interest and fees returned to the user. One of the best things about Impermax is the ability to repay loans by the individual asset. You may want to repay loans so you can deleverage or close a position to hedge against liquidation risk. In the example below, I owe some ETH to close my position but I am net positive on my USDT so owe nothing.

Just remember this:

When it costs more to borrow assets than you make on your leverage LP position, likely because the price of the assets have changed since your deposit, your net balance for that asset will turn negative.

That’s the time to consider reducing leverage or repaying loans (like I showed above) and canceling positions before you become too underwater and eventually get liquidated.

You can see the approximate leveraged APR you receive for borrowing assets and leveraging your LP under the “Leverage View” section of each market".

So, what does it cost you to borrow assets for your leveraged LP?

It may seem complicated but it essentially comes down to what the interest rate you pay on borrowing assets to those users supplying the assets.

You can get an idea of the constant cost in terms of interest you have to pay to borrow an asset (leverage) within an LP on Impermax. In the example below on the Sonic blockchain market on Impermax, it costs a LOT to borrow the asset $Shadow, but it costs very little to borrow $S. In this situation, if you are looking to leverage an LP, it becomes more attractive to borrow the cheaper asset, $S, and supply the more expensive asset, $Shadow.

What happens if you go out of range on your leveraged LP and get liquidated? To learn more, let’s head over to the handy FAQ page → docs.impermax.finance/protocol/liquidation I will use a screenshot from their FAQ below to help explain:

Tips on Leverage: As you can see from Impermax’s docs, being liquidated on a leveraged position does not mean you lose all your LP.

At max, you lose 4% of your borrowed amount. With more leverage, the costs of being liquidated go higher but you will never completely lose your deposit, no matter how degenerate your leverage was.

Liquidation can only occur when your set price range falls or rises beyond your limits, though keep in mind with volatility you could get liquidated even if your ranges aren’t exceeded. Generally, you want to stay 5% max away from either range to avoid liquidation.

Impermax wrote a very good section about avoiding liquidation on the same FAQ I linked above, it’s worth screenshotting and reading their own advice on leveraging LP successfully:

Their advice especially about understanding the inherent riskiness of leveraging LP's with volatile token values is important!!! The more volatile your underlying assets are in an LP, maybe it’s a memecoin paired with a L1 token like $S or $ETH or even another meme token, the higher the likelihood of your LP going outside of range and liquidating your borrowed loan becomes.

Lending: