Beginner's Guide to ETHRISE
Overview of how ETHRISE works and what users can expect in different scenarios
ETHRISE is ERC20 tokens that represents 1.7x-2.5x long exposure to ETH. It simplify the process of opening, managing, closing leveraged long ETH position and protect users from the liquidation. In this document we will talk about how ETHRISE simplify the process of managing 2x long ETH position.
Let's start with opening 2x Long ETH position. We will compare the difference between the traditional way of taking leverage using lending and borrowing protocol vs the ETHRISE way.
Suppose you are very bullish on ETH and you want to get 2x profits from your capital, so you want to take leveraged long position.
Assume that the current ETH price is 3000 USDC, ETHRISE net-asset value is 100 USDC and ETH LTV is 80%.
You don't even need to understand what is LTV in order to use Risedle
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Here is step by step to open 2x Long ETH via lending and borrowing protocol vs ETHRISE:
Step | Without ETHRISE | With ETHRISE |
|---|---|---|
Step 1: | User deposit 1 ETH to lending and borrowing protocol | Mint ETHRISE with 1 ETH |
Step 2: | User borrow 2400 USDC | User receives 30 ETHRISE token that represents 2x long position |
Step 3: | User Swap 2400 USDC to 0.8 ETH via Uniswap | DONE |
Step 4: | User deposit 0.8 ETH to lending and borrowing protocol | |
Step 5: | User borrow 600 USDC | |
Step 6: | User Swap 600 USDC to 0.2 ETH via Uniswap | |
Step 7: | User deposit 0.2 ETH to lending and borrowing protocol.
Total collateral 2 ETH
Total debt 3000 USDC | |
As u can see, ETHRISE simplify the complex process of opening leveraged position via lending and borrowing protocol to just one single step: "Mint".
You can learn more about how to mint ETHRISE in here:
The biggest risk of taking 2x long ETH position is liquidation. If you are taking leveraged long position using lending and borrowing protocol, it requires you to make sure that collateral health ratio is above certain threshold, otherwise your collateral will get liquidated and you will lose your ETH.
Managing your 2x long ETH position is rather tricky and requires you to actively monitor your health ratio. Risedle solve this problem using automatic rebalancing mechanism. You don't need to worry about liquidation when you are taking the 2x long ETH position using ETHRISE.
You can learn more about how the ETHRISE rebalancing process work in here:
The next step is closing 2x Long ETH position. We will compare the difference between the traditional way of closing leverage using lending and borrowing protocol vs the ETHRISE way.
Assume that the current ETHRISE price has increased +5% to 3150 USDC, ETHRISE net-asset value is increased +10% to 110 USDC. ETHRISE value increase 2x because it represents the 2x long position of ETH.
Here is step by step to close 2x Long ETH via lending and borrowing protocol vs ETHRISE:
Step | Without ETHRISE | With ETHRISE |
|---|---|---|
Step 1: | User withdraw 0.4 ETH from lending and borrowing protocol | Redeem 30 ETHRISE |
Step 2: | User swap 0.4 ETH to 1260 USDC via Uniswap | With total value of 3300 USDC. User able to redeem it as 1.04 ETH. |
Step 3: | User repay the 1260 USDC debt, now 1740 USDC debt left. | 1.04 ETH with total value of 3300 USDC.
User profit 300 USDC, 2x vs holding only ETH. |
Step 4: | User withdraw 0.32 ETH from lending and borrowing protocol | DONE |
Step 5: | User swap 0.32 ETH to 1008 USDC via Uniswap | |
Step 6: | User repay the 1008 USDC debt, now 732 USDC debt left. | |
Step 7: | User swap 0.23 ETH to 732 USDC via Uniswap | |
Step 8: | User repay the 732 USDC debt, now user debt free. | |
Step 9: | User withdraw all 1.04 from the lending and borrowing protocol.
Total collateral 1.04 ETH with total value of 3300 USDC.
User profit 300 USDC, 2x vs holding only ETH. | |
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As u can see, ETHRISE simplify the complex process of closing leveraged position via lending and borrowing protocol to just one single step: "Redeem".
You can learn more about how to redeem ETHRISE in here:
ETHRISE is a simple way to take 2x long exposure to ETH. User can enjoy leveraged gains by simply holding ETHRISE and protected from liquidation.
Last modified 1yr ago