Leverage Long Position¶

Amplify your exposure to an asset through recursive borrowing.

⚠️ High Risk Strategy¶

WARNING: This is an advanced, high-risk strategy.

Can amplify gains AND losses
Liquidation risk is significantly higher
Only for experienced users
Start small and understand the mechanics

The Strategy¶

Use borrowed USDST to buy more of your collateral asset, creating leveraged exposure.

How it works:

Supply ETHST as collateral
Borrow USDST against it
Swap USDST → more ETHST
Supply new ETHST as additional collateral
Repeat 2-3 times

Result: 2-3x exposure to ETHST price movements (up AND down)

Complete Example: 2x Leverage on 5 ETHST¶

Your starting position:

You have: 5 ETHST ($15,000)
ETHST price: $3,000
You believe: ETHST will go up
You want: 2x exposure (10 ETHST equivalent)

The play:

Round 1: Supply 5 ETHST, borrow $7,500, buy 2.5 ETHST
Round 2: Supply 2.5 ETHST, borrow $3,750, buy 1.25 ETHST
Total: 8.75 ETHST position
Debt: $11,250 USDST
Leverage: ~1.75x

Time needed: 20 minutes
Risk level: ⚠️ HIGH

Step-by-Step Implementation¶

Step 0: Understand the Risks (READ THIS!)¶

What can go wrong:

If ETHST drops 20%:

Without leverage: Lose $3,000 (20%)
With 2x leverage: Lose $6,000 (40% of initial capital)
Health factor drops significantly
May face liquidation

If ETHST drops 30%:

Without leverage: Lose $4,500 (30%)
With 2x leverage: Position likely LIQUIDATED
Lose most/all of your collateral

Only proceed if:

[ ] You understand liquidation mechanics
[ ] You can monitor position daily
[ ] You have funds to add collateral if needed
[ ] You accept risk of total loss

Step 1: Supply Initial Collateral (2 min)¶

Go to Borrow (in sidebar)
In Collateral Management table, find ETHST → Click "Supply"
Enter amount: 5.0
Click "Supply" (~$0.10 gas, approval automatic)

Result:

✅ Collateral: 5 ETHST ($15,000)
✅ Can borrow: Up to $11,250 (75% LTV)

Step 2: First Borrow (2 min)¶

Borrow conservatively to start:

Go to Borrow (in sidebar) → Borrow section
Amount: 7,500 USDST (50% of collateral value)
Review:
Health Factor: 1.6
Conservative start
Click "Borrow" (~$0.10 gas)

Result:

✅ Borrowed: 7,500 USDST
✅ Health Factor: 1.6
✅ Debt: 7,500 USDST

Step 3: Swap USDST → ETHST (2 min)¶

Go to Swap Assets
From: USDST → Amount: 7,500
To: ETHST
Review:
Receive: ~2.49 ETHST (after 0.3% fee)
Rate: ~$3,009/ETHST (including fee)
Click "Swap" (~$0.10 gas)

Result:

✅ Wallet: +2.49 ETHST
✅ Total ETHST owned: 7.49 (5 in collateral + 2.49 in wallet)

Step 4: Supply New ETHST (2 min)¶

Add the new ETHST to collateral:

Go to Borrow (in sidebar)
In Collateral Management table, find ETHST → Click "Supply"
Enter amount: 2.49
Click "Supply" (approval automatic)

Result:

✅ Total collateral: 7.49 ETHST ($22,470)
✅ Debt: 7,500 USDST
✅ Health Factor: 2.4 (improved!)
✅ Can borrow more: Up to $16,852

Step 5: Second Borrow Round (2 min)¶

Now borrow again:

Go to Borrow (in sidebar) → Borrow section
Amount: 3,750 USDST (additional borrowing)
Check Health Factor: Will be ~1.6
Click "Borrow"

Result:

✅ Total debt: 11,250 USDST
✅ Health Factor: 1.6
✅ Can borrow: ~$5k more

Step 6: Second Swap & Supply (4 min)¶

Repeat the process:

Swap: 3,750 USDST → ~1.24 ETHST
Supply: 1.24 ETHST to collateral

Final Result:

✅ Total collateral: 8.73 ETHST ($26,190)
✅ Total debt: 11,250 USDST
✅ Health Factor: 1.86
✅ Leverage: 1.75x

Your Leveraged Position¶

Position Summary¶

Starting capital: 5 ETHST ($15,000)

Final position:

Collateral: 8.73 ETHST ($26,190)
Debt: 11,250 USDST
Net value: $14,940 (slight loss from fees)
ETHST exposure: 8.73 ETHST (vs 5 originally)
Leverage: 1.75x

Effective Exposure¶

Price movement impact:

ETHST Price Change	Your Gain/Loss	vs No Leverage
+10%	+$2,619 (17.5%)	+$1,500 (10%)
+20%	+$5,238 (35%)	+$3,000 (20%)
+50%	+$13,095 (87%)	+$7,500 (50%)
-10%	-$2,619 (17.5%)	-$1,500 (10%)
-20%	-$5,238 (35%)	-$3,000 (20%)
-30%	-$7,857 (52%)	-$4,500 (30%)

Amplification: ~1.75x in both directions ⚠️

Risk Management¶

Critical Health Factor Levels¶

Your HF: 1.86

Safe zones:

HF > 1.5: ✅ Safe, relax
HF 1.3-1.5: ⚠️ Monitor daily
HF 1.1-1.3: 🔴 Dangerous, add collateral soon
HF < 1.1: 🚨 URGENT - liquidation imminent

Price Drop Tolerance¶

When liquidation hits:

Health Factor = 1.0 at liquidation
Current HF = 1.86

Safe price drop = 46.2%
ETH can drop from $3,000 to ~$1,614

Set price alerts:

Warning: $2,000 (-33%)
Urgent: $1,800 (-40%)
Critical: $1,700 (-43%)

How to Respond to Drops¶

If ETHST drops 10% ($3,000 → $2,700):

Option 1: Add collateral - Supply more ETHST or other assets - Improves HF immediately - Keep leverage

Option 2: Repay debt - Repay 2,000-3,000 USDST - Reduces risk - Lower leverage

Option 3: Partial exit - Sell 1 ETHST for USDST - Repay debt - De-leverage partially

Advanced: 3x Leverage (Extremely High Risk)¶

⚠️⚠️⚠️ NOT RECOMMENDED FOR MOST USERS

To achieve ~3x leverage:

Perform 4-5 rounds of borrow→swap→supply
Final position:
Collateral: ~15 ETHST from 5 ETHST start
Debt: ~$30,000 USDST
HF: ~1.1-1.2 (very risky)
Liquidation at 15-20% ETHST drop

Why this is dangerous:

Tiny drops = liquidation
High interest costs
Difficult to exit
Slippage on large swaps

If you must:

Use CDP instead (lower fees)
Monitor every few hours
Have exit plan ready
Accept high probability of liquidation

Cost Analysis¶

Costs of Leverage¶

One-time costs: | Item | Cost | |------|------| | Swaps (2 rounds × 0.3%) | ~$33 | | Gas fees (6 transactions) | ~$0.60 | | Total initial | ~$33.60 |

Ongoing costs: | Item | Annual Cost | |------|-------------| | Interest (5% on $11.25k) | $562.50/year | | Monthly | ~$47/month |

Break-even Analysis¶

To profit after 1 year:

ETH must rise > 3.75% to cover interest costs

Example scenarios:

ETHST +5%: Net gain ~$219 (1.5%)
ETHST +10%: Net gain ~$2,056 (14%)
ETHST +20%: Net gain ~$4,675 (31%)

Without leverage (5 ETHST):

ETHST +5%: $750 gain (5%)
ETHST +10%: $1,500 gain (10%)
ETHST +20%: $3,000 gain (20%)

Exit Strategy¶

Taking Profits¶

If ETHST rises 50% ($3,000 → $4,500):

Your position:

Collateral: 8.73 ETHST ($39,285)
Debt: 11,250 USDST (unchanged)
Net value: $28,035
Profit: $13,035 (87% gain!)

How to exit:

Sell some ETHST:
Withdraw 2.5 ETHST from collateral
Swap → USDST
Receive ~$11,220
Repay all debt:
Repay 11,250 USDST
Zero debt
Withdraw remaining collateral:
Withdraw 6.23 ETHST
Total ETHST in wallet: 6.23
Plus any leftover USDST

Final result:

Started: 5 ETHST at $3,000 = $15,000
Ended: 6.23 ETHST at $4,500 = $28,035
Profit: $13,035 (87%)
vs no leverage: $7,500 (50%)

Real Example: 90-Day Scenarios¶

Scenario A: Bull Market 🚀¶

ETH: $3,000 → $3,900 (+30%)

Metric	No Leverage	With Leverage
Starting value	$15,000	$15,000
Ending value	$19,500	$23,097
Interest paid	$0	$141
Net profit	$4,500 (30%)	$7,956 (53%)

Leverage wins: Extra $3,456 profit ✅

Scenario B: Sideways Market ➡️¶

ETH: $3,000 → $3,000 (0%)

Metric	No Leverage	With Leverage
Starting value	$15,000	$15,000
Ending value	$15,000	$14,859
Interest paid	$0	$141
Net profit	$0	-$141

Leverage loses: Bleed from interest ❌

Scenario C: Bear Market 📉¶

ETH: $3,000 → $2,400 (-20%)

Metric	No Leverage	With Leverage
Starting value	$15,000	$15,000
Ending value	$12,000	$9,702
Interest paid	$0	$141
Net loss	-$3,000 (20%)	-$5,439 (36%)

Leverage amplifies loss: Extra -$2,439 loss 🔴

Tips for Success¶

DO ✅¶

Start with low leverage (1.5-2x max)
Set strict price alerts
Check position daily (multiple times if volatile)
Have plan to add collateral or exit
Take profits incrementally
Use CDP for long-term (lower fees)

DON'T ❌¶

Go above 3x leverage (extremely risky)
Leverage with money you can't lose
Ignore health factor warnings
Leverage in bear markets
Add leverage when already down
Forget about interest costs

When to Use Leverage¶

GOOD Times ✅¶

Strong bull market momentum
High conviction on price direction
Low volatility environment
You can monitor frequently
Have capital to add if needed

BAD Times ❌¶

High market volatility
Uncertain market direction
Can't monitor regularly
Already maxed out capital
Bear market or downtrend

Alternative: Leverage via CDP¶

Better for long-term leverage:

Advantages:

Lower fees (2.5% vs 5%)
Track CR instead of HF
Better for multi-month positions

Same risks:

Liquidation danger
Amplified losses
Interest costs

Note: Lending and CDP use separate collateral vaults - you cannot share the same collateral between both systems

Troubleshooting¶

"Can't borrow more - insufficient collateral"¶

Problem: Hit borrowing limit

Fix:

Stop adding leverage
Current position is max safe level
Don't force it

Health factor dropping fast¶

Problem: ETHST price falling

Urgent actions:

Add collateral immediately
Or repay debt
Don't wait for liquidation

High slippage on swaps¶

Problem: Large trade size

Fix:

Split swaps into smaller sizes
Wait between rounds
Accept that max leverage is limited

Summary¶

Leverage amplifies everything:

✅ Gains in bull markets
❌ Losses in bear markets
💰 Interest costs always apply
⚠️ Liquidation risk is real

Use responsibly:

Low leverage (1.5-2x)
High conviction only
Strict risk management
Have exit plan

Next Steps¶

Risk Management - Hedge leveraged positions
Exit Strategy - Close quickly if needed

Need Help?¶

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