Benefits of Short/Long Position

Benefits of Short Leveraged Yield Farming?

As time goes and the price of volatile asset drops as you expected, your debt value will drops at a faster rate than your LP position value which acts as your collateral, resulting in a healthier leveraged LP position (lower debt ratio). Therefore, you can continue earning APY from leveraged yield farming on EZ-FI longer with lower risk of liquidation.

However, if the market goes in the opposite direction of your speculation thesis, says APT price goes up rather than down, you will be exposed to higher risk of liquidation as your debt will grow faster than your collateral value (higher debt ratio).

Benefits of Long Leveraged Yield Farming?

As time goes and the price of volatile asset rises as you expected, you debt value will remain the same while your LP position value which acts as your collateral grow, resulting in a healthier leveraged LP position (lower debt ratio). Therefore, you can continue earning APY from leveraged yield farming on EZ-FI longer with lower risk of liquidation.

However, if the market goes in the opposite direction of your speculation thesis, says APT price goes down rather than up, you will expose to higher risk of liquidation as your debt will remain the same while your collateral value drops (higher debt ratio).