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?
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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:
• 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”.