Why to Multiply on Summer.fi?
Multiply on Summer.fi allows you to borrow assets against the Crypto Assets you already own. All in a non-custodial way.
Multiplying on Summer.fi?
Multiply vaults of Summer.fi makes it very straightforward to increase your exposure to an asset with multiples up to 5x available, but it doesn’t stop there.
Many DeFI users shy away from Multiply because they think it is far too risky. While it is true that Multiply positions do have liquidation risk, there are many different ways to approach multiply, depending on your risk tolerance.
Why Multiply on Summer.fi?
At Summer.fi, we mainly see 4 reasons users borrow against their Crypto Assets.
Buying dips
Increasing exposure is all about your entry. The simple math is that in order to be profitable, you need to close your position at a higher price than when you opened it.
One way to increase the probability of doing so by Multiplying when you see a large price decrease in the market. Of course, this is easier said than done.
The critical question is, how confident are you that the price of the asset you are Multiplying will be much higher than it is now, relative to the borrowed asset?
To learn more about how to think about it, visit our use cases page.
Accumulating over time, at your own pace.
Not everyone wants to buy every dip. Some people want to just increase their exposure over time, little by little and Summer.fi. Multiply vaults also give you that ability.
A simple way to do this one Summer.fi is to simply increase the exposure to an asset with our one transaction increase exposure over time.
The key thing to keep in mind here is the following questions:
- What is the max price I am ever willing to buy this asset at?
- What is my tolerance for outstanding debt? what is the max debt that I am willing to take on?
To learn more about how to think about it, visit our use cases page.
Following a trend
Some of the greatest trades are made after a trend has been established, especially in a bull market. Thus, waiting to buy dips is not in your favor, as you might be waiting a long time.
One approach to this is buying key levels up until a point. For example, say you identify that 2900 ETH/USD is an important level, you can buy that price break out and more from a Multiply vault in one transaction. In fact you can even set it and forget it with “Auto Sell” and “take profit” automation.
The key question here is being very clear about your entry and exit points.
- What evidence do you have that can give you an idea of when a trend has begun and at what point it is likely to end?
To learn more about how to think about it, visit our use cases page.
Shorting a rise in price
Prices don’t always go up. Summer.fi also allows users to increase their exposure to an asset by going short another asset. For example, users can borrow ETH against USDC to express this view.
DeFi Position Automated Management: The Multiply Game Changer
Multiplying is tough enough as it is. One significant advantage of using Multiply on Summer.fi is the DeFi position management automation tools that we provide.
These tools make position management for Multiply users much easier.
Why?
Liquidation Protection Our Stop-Loss, Trailing Stop-Loss and Auto-Sell automations protect users from liquidation risk, and unnecessary loses more generally.
Opportunity Capturing
Our Auto-Buy automation makes capturing trends and ride price waves seamless.
Similarly, our Auto Take-Profit automation makes it easy for users to scale out of positions and realize their profits as prices rise.
Other key benefits of multiplying on Summer.fi
Once you know why you are multiplying on Summer.fi, it is also good to understand key benefits of Multiplying on Summer.fi:
- One transaction increase and decrease exposure makes management simple.
- Non custodial still, your always in control.
- Close in one transaction.
- Choose from all the highest quality protocols.
- Switch to a better rate or more optimal parameters easily.
- Liquidation protection available with Automated DeFi Position Management (Trailing stop, Stop loss)
How do I choose the proper multiply position?
Now that you know why to multiply, the question becomes which multiply position/pair is right for you.
In short, you should decide on a pair based on 6 factors:
- Asset Selection: Which Collateral do you have or which do you deem as fungible and which Debt tokens do you want to have exposure to?
- Protocol: Which protocols do you trust?
- Liquidity: Is there enough available on offer for you to borrow?
- Borrow Rate, cost vs LTV / Max Multiple: How much do you want to be able to borrow against your collateral? and what at cost are you willing to pay to borrow?
- Borrow Rate, variability: How comfortable are you with rates changing rapidly?
- Protection and optimization, automation availability: Do you want access to Automated Position management tools?
For a more in depth guide to choosing the right position type/pair for you, read our full guide here.
For all other common questions and to learn how it all works, please visit our knowledge base.
Getting in touch
If you have any questions regarding Summer.fi, contact us at support@summer.fi or our social media.