1/ Stablecoins on Vertex āļø
Ever wanted to short $USDT? How about long?
Leveraged Spot is Vertexās response to the art of looping, but what is it & why should you care?
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2/ Looping
A common DeFi strategy to long spot positions, which involves repeatedly borrowing and depositing two assets.
Let's look at an example:
ā¢ Deposit for BTC
ā¢ Use that BTC as collateral to borrow ETH
ā¢ Use that ETH to swap for more BTC
ā¢ Rinse & repeat
3/ In other words, looping can achieve similar leverage to perps but comes with various benefits, such as:
- You own the spot asset.
- Lower price manipulation risks.
- Cheaper (money market rates usually less volatile than perp funding rates)
4/ However, looping does come with various downsides:
ā¢ Looping is complicated (lots of button-clicking)
ā¢ Expensive on gas
ā¢ Restrictive - many lending protocols take a large haircut on the amount borrowable, restricting the number of loops possible.
5/ Looping on Vertex
Vertex takes the fundamentals of looping while improving the experience tenfold.
Known as āleveraged spotā, users can automatically loop their position when trading spot markets to achieve a leveraged spot position.
6/ But what does this look like in comparison to Aave?
ā”ļø Looping on Aave
ā¢ Up-to 4x leverage
ā”ļø Looping on Vertex
ā¢ Up-to 20x leverage
7/ On Vertex, instead of having to manually loop, all of the borrowing & depositing is handled within a single DEX via Vertexās integrated money market.
Meaning no more manually repeating each step of depositing + borrowing on a siloed DeFi app!
8/ Longing & Shorting Stablecoins
Leveraged Spot enables users to go Long or Short on a stablecoin by making use of Vertex's integrated Money Market & USDT-USDC spot market.
9/ On Vertex, users can:
ā”ļø Borrow USDC against collateral to sell for USDT
ā”ļø Borrow USDT against collateral to sell for USDC
By turning on Leveraged Spot, users can repeat this process up to 20x leverage in a similar manner to perp leverage.
10/ Please remember that this is an educational example intended only to display the use-case of leveraged spot on Vertex.
Borrow & deposit APR rates on Vertex are variable ā always account for this.
Stay tuned for more editions of āStablecoins on Vertexā.