Stablecoins on Vertex: Leveraged Spot

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1/ Stablecoins on Vertex ⚖️ Ever wanted to short $USDT? How about long? Leveraged Spot is Vertex’s response to the art of looping, but what is it & why should you care? 🧵👇

2/ Looping A common DeFi strategy to long spot positions, which involves repeatedly borrowing and depositing two assets. Let's look at an example: • Deposit for BTC • Use that BTC as collateral to borrow ETH • Use that ETH to swap for more BTC • 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: • Looping is complicated (lots of button-clicking) • Expensive on gas • 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 “leveraged spot”, 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? ➡️ Looping on Aave • Up-to 4x leverage ➡️ Looping on Vertex • 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 Vertex’s 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: ➡️ Borrow USDC against collateral to sell for USDT ➡️ 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 – always account for this. Stay tuned for more editions of “Stablecoins on Vertex”.