Leveraged Mining
Leveraged mining
Leveraged mining boasts a high APY due to increasing exposure through leverage. This is done by using your base assets as collateral to borrow more assets and using those assets to mine as well.
Leveraged mining risks
The high yield from leveraged mining does not come without risks, which are explained below.
Leveraged miners bear a risk of impermanent loss. The impermanent loss risk is exacerbated by the leverage level that is used. Read more about impermanent loss here.
Note that impermanent loss risk is minimal in a pool with only stablecoins
Additionally, because of the impermanent loss risk and the fact that users are taking on leverage, users' positions also have liquidation risk.
When Risk = 100%, the position would be at liquidation risk. At liquidation risk, any liquidator can liquidate your position.
When liquidators liquidate your position, they will be repaying the debt in exchange for the liquidation bounty.
For instance, if you have 20 BNB in debt and liquidators choose to liquidate 10 BNB (they don't have to repay the debt in full) by repaying 10 BNB, liquidators will get LP token back in a value equivalent to 10.5 BNB (5% liquidation bounty).
If this liquidation brings your Debt Ratio below 100%, other liquidators will not be able to continue liquidating your position.
As a result, you will still have your leveraged position at a smaller position value. Your position value is smaller because:
1) A part of your position value (in LP token) is given to liquidator as a bounty
2) A portion of the debt is being repaid by the liquidator. Amount of debt also contributes to your position value.
Mining
Under the "Mining" tab, select the pair you wish to mine. The first time will require an additional approval.
Input your desired parameters, then click on "Farm" at the bottom, then approve the transaction.
The record should now show up under "My Position"
Increasing supply
To increase your position for mining, simply click on "Supply" under "My Position"
Input the parameters and click on "Farm"
Redeem
To close your position, simply click on "Redeem" under "My Position"
Click on "Confirm" and approve the transaction.
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