Leverage Farming
What is Leveraged Yield Farming?
Leveraged Farming is a core feature of Mighty Finance, enabling users to amplify returns by borrowing additional funds to invest in liquidity pools. By using existing assets as collateral, users can borrow stable or non-stable coins to purchase more tokens, increasing their exposure and potential profits.
Leverage Farming is one of the most effective ways to maximize capital efficiency. It requires no extra collateral, allowing users to fully benefit from leverage. Additionally, a well-planned Leverage Farming strategy can significantly reduce the impact of impermanent loss (IL).
Example: How Leverage Farming Works
Let’s illustrate this with an example:
User A has $1,000 in S and $1,000 in USDC.e
The user deposits these into the S/USDC.e liquidity pool on Shadow Exchange, earning a 640% APR.
While 640% is a decent return, User A wants higher yields.
How Mighty Finance Helps
Instead of manual investment, User A turns to Mighty Finance for leveraged yield farming:
The user opens a 3x leverage position, borrowing an additional $2,000 in S and $2,000 in USDC.e
Factoring in a 5% borrowing rate, the user's new APR becomes: 3 * 640% − 2 * 5% = 1,910%
Addressing Impermanent Loss (IL)
While leverage boosts returns, it also increases exposure to impermanent loss (IL). To manage this risk, User A adjusts borrowing strategy:
Instead of borrowing an equal amount of S and USDC.e, the user only borrows USDC ($4,000) while maintaining the 3x leverage.
This effectively creates a long position on S, benefiting from potential price appreciation when S price increases.
With this approach, User A:
Mitigates IL risks in both price increases and declines.
Optimizes returns across different market conditions.
Beyond this strategy, Mighty Finance will offer a range of customizable Leverage Farming strategies that adapt to various market scenarios.
Why Choose Mighty Finance for Leverage Farming?
Mighty Finance makes leveraged yield farming accessible, efficient, and secure.
Up to 5x leverage – Amplify returns while maintaining risk control.
Diverse liquidity pools – Choose from various options to fit your strategy.
Customizable farming strategies – Adjust leverage and borrowing combinations for different market conditions.
Note: Leveraged farming involves risks, including exposure to volatile markets and borrowing costs. Users should conduct thorough research before investing. For the more details of the risks, please refer to the Risks page.
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