FAQs
Why should I use the application to gain exposure to an asset's price instead of directly buying it from the market? Let's say a user has 1,000 USDC and ETH price is $1,000. A user could swap their USDC for 1 ETH and after some time if the ETH price increases to $2,000, they could sell it for 2,000 USDC and gain a proportional upside. Using the leverage application, a user could use 4x leverage and open a long position with his 1,000 USDC. During this process, the user would have a 4 ETH deposit on AAVE and 3,000 USDC debt. As the price of ETH increases to $2,000, a user could close his position and get back 5,000 USDC, gaining a higher upside.
Can my position be liquidated? Yes, your position would be liquidated by AAVE if your health factor is too low. Please ensure your health factor is always above 1 to avoid liquidation.
My account's health factor is close to 1. How can I avoid a liquidation? You could either close your position or add a margin. Adding margin will increase your health factor.
What does creating an account on your CHFRY mean? For the leverage trading application, we utilize DeFi Smart Accounts, inspired by Instadapp. A DeFi Smart Account(DSA) is a smart contract that is an extension of your wallet. A DSA allows you to perform atomic and composable operations while having full custody of your assets. Note, that the smart account is tied to your wallet address and only you are in control of it.
Why cannot I see my position on AAVE's website? As we use smart accounts, all the borrowing and lending executed on AAVE are performed by your DSA address, so the positions recorded on AAVE are based on your DSA account instead of your wallet address. As such, AAVE's website is unable to show your positions. However, we provide all the information on our website along with the capability to withdraw your funds from DSA should you need to.
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