Leveraged Yield Farming Trading Strategies
To be a profitable trader. You must have strategies, and you must follow them. Here are some strategies that you can apply to your trading.
Remember the words “Strategy is not the consequence of planning, but the opposite: its starting point.” — Henry Mintzberg
Leveraged Long
If you have a bullish view on a coin or token, you can utilize leverage to farm at more than 2x leverage by borrowing the opposite token of what you hold.
For example:
Mr. Hulkie’s guts telling him that BNB will be bullish, he decides to open a BNB-USDC position, borrowing USDC at 3x leverage. His collateral (initial capital) is US $1000 worth of BNB.
- Deposit: $1000
- Total position value: $3000 (borrowed 2000 USDC)
The amount borrowed is $500 worth of USDC will be swapped to BNB to make a 50:50 farming ratio.
Exposures:
USDC is a stablecoin pegged to USD. The price is stable, so the position of the stablecoin is effectively neutral.
- USDT: Short 500
- BNB: Long 1500
For the example above, you will have 1.5x leveraged long on BNB at 3x leverage.
Leveraged Short
The market cycle is a roller-coaster ride, corrections are regular parts of investing, and leveraged yield farming offers users to profit in a bearish market.
For example:
Solana had breaking news that the network had some issues, leading Solana users to move to another network. You can short SOL by farming SOL-USDC while borrowing SOL at more than 2x leverage.
Victor decides to short SOL by opening SOL-USDC position, borrowing SOL at 3x leverage.
- Deposit: $1000
- Total position value: $3000 (borrowed $2000 worth of SOL)
The borrowed SOL worth $500 will be swapped to USDC to make a 50:50 farming ratio. In this example, you will have a short position on SOL.
- SOL: Short $500
Pseudo Market-Neutral Strategy (Delta-zero Position)
We have something for conservative risk-takers that seek to maximize their profit that can achieve a delta-neutral position by combining both of the strategies mentioned above.
To implement this strategy, you borrow the exact worth of stablecoin and non-stablecoin assets in a leveraged position.
For example:
Sniper wants to farm on ETH-USDC. Sniper needs to open a position that borrows two assets.
Deposit $1000 worth of USDC and borrow $2000 of USDC with a leverage of 3x
- Deposit: $1000
- Borrow: $500 USDC + $1500 worth ETH (the total position will be $3000, and $1500 will be used to long ETH)
- Total position value: $3000
As explained in the previous strategies, we can ignore the exposure of stablecoin as the exposures on ETH will be nullified.
- ETH: Long $1500 — Short $1500 = 0
Conclusion:
Leveraged yield farming offers high earning potential as it can accommodate different market conditions using the strategies given above, which include market-neutral positions despite the bull or bear market.
Eternal Finance provides an experience to users that no longer limits them to traditional finance and yield farming. Everyday joes can easily take advantage of Eternal Finance’s leveraged yield farming platform, single-click leveraged yield farming strategies (i.e., Pseudo Market-Neutral Strategy), and low entry barriers to gain substantial profits.
About Eternal Finance
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