How does it work
AirPuff empowers users to leverage their positions and farm points by strategically selecting the underlying protocol and Liquid Restaking token. Borrowing capital from lending pools, users can earn leveraged points from the underlying protocol and Eigenlayer while compensating lenders through a variable interest rate based on pool utilization.
Leverage: Borrowing ETH
For buffs involving LRT, users can choose to borrow ETH, enabling them to maintain a neutral stance regarding ETH's price fluctuations—this means changes in ETH/USD won't impact their debt-to-value ratio or their risk of liquidation. Here’s how the deposit mechanism works:
Users select the preferred protocol for points farming and specify the leverage size and borrowing asset they want.
The necessary capital is sourced from the lending pool to meet the requested leverage amount.
The deposited and borrowed ETH are then merged and converted into the Liquid Restaking Token (LRT) using Kyberswap.
Interest accumulates on the leveraged position, causing the Debt-to-Value (DTV) ratio to increase until the position is adjusted, or it reaches the liquidation threshold.
For buffs focusing on assets not related to ETH, like Ethena sUSDe, users must borrow related assets (i.e. Stablecoins in sUSDe case) to maintain a neutral position.
Leverage: Borrowing non-ETH
Users can also choose to borrow non-ETH assets like stablecoins, enabling them to create a long position on ETH's price. This means that the increase in ETH/borrowing-asset price will reflect as an additional profit on user's position, bringing additional reward on top of the points and yield farmed.
Users select the preferred protocol for points farming and specify the leverage size and borrowing asset they want.
The necessary capital is sourced from the lending pool to meet the requested leverage amount.
The deposited and borrowed asset are then merged and converted into the underlying asset using Kyberswap.
Interest accumulates on the leveraged position, causing the Debt-to-Value (DTV) ratio to increase until the position is adjusted, or it reaches the liquidation threshold.
However, it's important to note that for non-ETH borrowings, users will bear the associated price risks, which could potentially lead to liquidation events.
Withdrawal Mechanism
Upon closing their positions, users' holdings are converted via Kyberswap to repay the borrowed assets and reclaim their collateral. AirPuff implements a slippage cap on these transactions to protect users against possible liquidity issues in certain pools. The process unfolds as follows:
The entire position undergoes a swap on Kyberswap, dividing into the debt portion and the initially deposited collateral.
The borrowed asset is first returned to the lending pool in its original form.
After subtracting any accrued interest, the leftover collateral is then returned to the user.
Leveraging Points
AirPuff's innovative leveraging strategy opens the door for users to significantly amplify their points rewards, offering up to 15x leverage on rewards from both Liquid Restaking protocol points and Eigenlayer points. This potent approach allows users to magnify their potential rewards to new heights.
For those seeking a less aggressive strategy, opting for 1x leverage offers a way to avoid borrowing interest while still benefiting from point multipliers. This approach affords users the opportunity to earn three layers of points simultaneously: AirPuff points, LRT points, and EigenLayer points, enriching their rewards portfolio without the burden of additional costs.
It's important to highlight that leveraging involves sharing a portion of the earned points—10% with lenders and 5% with $APUFF lockers. This sharing mechanism is crucial for maintaining a balanced ecosystem, ensuring that lenders, AirPuff supporters, and leveragers alike share in the collective success. It's a strategic way to foster a symbiotic relationship within the AirPuff community, ensuring a fair distribution of rewards across the board.
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