As market conditions fluctuate, strategically increasing leverage can enhance your position’s profitability. This brief guide provide essential steps for upscaling your leverage in Extra Finance protocol farming when the asset prices increase.
What you will find in this article:
Increasing your leverage
1) Initiate from the position panel: navigate to the “Add collateral” option in the main panel of your position, clicking the “Add” button.
2) Position update options: upon “Update [your pool] Position”, you’ll be presented with two choices:
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Add collateral: use available funds in your wallet to boost the collateral (thus decreasing leverage), which will be explained in the next article.
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Borrow more: opt for borrowing additional funds from the protocol by selecting “Borrow more”. Here’s where you select your desired leverage level.
Note: Extra Finance offers the option of up to 4x leverage in some pools. This comes with one specific condition known as “veEXTRA Boost”. This requires the staking of 2,000 veEXTRA tokens.
3) Leverage selection: with your chosen leverage, the characteristics will vary and can be reviewed on the right-hand side of the screen, detailing:
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The APR of the entire position.
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The APY of the entire position.
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The daily APR.
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Price impact.
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Swap cost.
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Estimated liquidation price.
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Updated net exposure: displaying the new total value of the position post-leverage adjustment, accounting for both the user’s contribution and additional borrowed amount.
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Updated leverage.
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Assets borrowed.
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Updated total debt.
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Updated total position.
4) Profit and Loss simulation: below, a graph illustrated a PnL simulation, offering a visual representation of how gains and losses may fluctuate under varying market conditions.
5) Confirmation: by pressing the “Confirm” button, you agree to the new loan conditions and thus update your position.
6) Protocol permissions: Extra Finance will request permission to manage different tokens for the position update:
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Asset #1 allowance.
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Asset #2 allowance.
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Authorize position update.
By following these steps, you can efficiently adjust the leverage in your farming activities within the Extra Finance protocol, aiming to maximize your returns while managing risks associated with market changes.
Lynn Brooke
This article serves educational purposes and is not financial advice. We encourage you to do your own research and be responsible for your actions in the financial space.