What is LEVER and how does it work?

What is LEVER and how does it work?

Leverfy is a decentralized, on-chain leveraged trading platform built on Ethereum. The platform aims to solve various Decentralized Finance (DeFi) problems through a suite of intuitive solutions.

What is LiverFi?

Leverfy is a permissionless, on-chain leveraged trading platform that aims to provide a number of unique, simple features to increase asset efficiency. Asset efficiency refers to how well investors use their time and assets, and how well they apply trading strategies to maximize returns and minimize risk and cost. The more efficient you are, the more likely you are to generate high returns with less capital and fewer resources.

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As a decentralized exchange (DEX), LiverFi provides users with transparency and self-custody on their assets.

for investors

Leverfy allows investors holding yield-yielding assets to take larger trading positions by providing a way to manage (i.e. consolidate and trade) them within a single margin basket. A consolidated margin basket can also help reduce liquidation risk by diversifying risk across the basket.

Investors can also earn returns by trading on margin. The platform buys the underlying assets from DEXe’s liquid secondary market. Leverfy routes transactions through various trading platforms to ensure optimal pricing with minimum slippage.

for property owners

Lenders on Leverfy can lend to investors for real returns without risk. Realized returns on Leverfy are highly competitive and sustainable, making it an attractive option for lenders. Leverfy’s robust platform design allows lenders and investors to interact with each other securely and without permission.

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How does LiverFi work?

There are four main components that make up the Leverfy ecosystem: Collateral Manager, Trading Manager, Loan Manager and Risk Manager. These managers are powered by smart contracts that help the platform perform tasks.

collateral manager

To start trading, users must first deposit assets as collateral. Margin Manager makes it easy:

  • Deposit and Withdrawal of Collateral
  • Distributing collateral to generate returns
  • Collateral Verification via Chainlink Oracle

investment manager

Trading managers smart contracts perform investment-related functions, including:

  • Execution of purchase and sale transactions
  • commercial agreement
  • Profit and Loss (PNL) Calculation
  • investment guidance
  • profit return

Loan Manager (Lending Manager)

To generate returns, lenders must pool their assets into lending pools, where investors will borrow them to trade. Loan manager smart contracts keep the process running smoothly through the following functions:

  • depositing and withdrawing borrowed assets
  • recording of borrowed assets
  • Calculating and Accumulating Lending Fees Using the Utilization Rate Curve

risk Manager

One of the risk management strategies of the Leverfy ecosystem is liquidating investors at risk of bad debts. Risk managers perform smart contract risk-related tasks, including:

  • account health calculation
  • Credit-to-Value (LTV) Management of Collateral Risk Parameters
  • Management of liquidation limit risk parameters
  • Payment of profit and loss to the investor

What is lever?

The Leverfy ecosystem operates using LEVER, an ERC-20 token built on the Ethereum blockchain. LEVER has a total supply of 35 billion tokens but has no underlying value. However, it serves as the backbone of the LiverFi platform in two key ways:

  • As a governance token for protocol management
  • placing bets to win some of the platform fee

Lever holders can participate in the governance of the ecosystem by having a say in important decisions that affect the future of the platform. They can also stake their tokens, meaning they can be locked up for a certain period of time in order to earn rewards from platform fees. These fees are derived from user activities such as trading, borrowing and lending.