Getting started with Multiply
Multiply vaults can look and sound scary when you’re first starting out, but after reading this post, you’ll be ready to open your first position!
Why to open a Multiply vault?
There are several reasons why you should open a Multiply position (if the circumstances allow), Multiply is basically increasing exposure to a certain asset you choose, on Summer.fi you can go both long and short on these assets.
Now, imagine a big dip in an upward trend, you’d like to get the most out of it for sure, then this is a good time to Multiply! Going 2x or 3x on a dip can be very profitable, but remember, you losses will also be multiplied, so be careful.
Multiply can also be used to accumulate in a very simple way, if you slightly move the slider to the right, you will be buying more collateral and increasing the exposure.
When should you consider Multiply over another type of position?
There are several cases in which Multiply can be used over Borrow or Earn. Let’s go over a few of them.
Bullish Sentiment: When you anticipate a rise in asset prices, multiplying your exposure can be profitable in the long run.
Low Volatility: During periods of stable prices, a multiplied position can maximize returns without significant risk.
Strong Fundamentals: If the underlying asset has strong fundamentals, you can enhance your position with reduced risk.
Yield Opportunities: When attractive yield farming or staking opportunities are available, using Multiply can increase your returns over a 1x position.
Customizing Risk Exposure and Active Position Management
One advantage of opening a Multiply Vault is the ability to tailor the level of risk to your individual preferences. Vaults provide flexible parameters to find the right balance between risk and potential returns.
Getting the Right Amount of Risk for You: Multiply Vaults enable you to adjust crucial settings such as liquidation prices and loan-to-value (LTV) ratios. The liquidation price determines the threshold at which your position may be liquidated to cover the loan, while the LTV ratio dictates how much you can borrow against your collateral.
By carefully configuring these settings, you can establish a risk profile that aligns with your risk tolerance. For instance, setting a higher liquidation price and lower LTV ratio reduces liquidation risk and may limit your potential upside. Contrarily, a lower liquidation price and higher LTV ratio increase your leverage and potential returns but amplify the liquidation risk.
Understanding How to Manage the Position
Multiply Vaults provides a comprehensive suite of tools to manage your positions actively, allowing you to respond to market conditions and adjust your risk exposure accordingly.
Increase or Decrease Risk: As market dynamics shift, you can increase or decrease your risk by adding or removing collateral or adjusting your multiplier. Summer.fi makes it easy for you with a clean and friendly UX. With just a few clicks or moving the slider, you can easily adjust your position.
Close Positions: If you wish to exit a particular position, Multiply enables you to close out your position and reclaim your collateral in a single tx. We’ll flashloan the needed amount of debt to close, and then deposit the rest of your collateral to your Smart DeFi Account.
Monitor Market and Check PnL: Vaults offer real-time monitoring, allowing you to track market movements, asset prices, and profit and loss (PnL) status. All this info is available in the Overview and will help you make a better-informed decision when actively managing your position.
Now you know (almost) everything you need to know about Multiply. In this article, we already covered “How to choose the best Multiply Position” so we invite you to read it to learn more about choosing and the factors considered.
Getting in touch
If you have any questions regarding Summer.fi, contact us at support@summer.fi or our social media.