How it works
Opening a Long position
The long position is for those users who are bullish on market conditions and seek to profit from price appreciation of assets against fiat stablecoins.
When you open a new long position, let's say for ETH using your USDC, the following steps take place within the transaction:
You borrow additional USDC through a flash loan from CHFRY in order to leverage your position and increase your purchasing power;
Your USDC is swapped for ETH on a decentralized exchange (DEX), in this case, Uniswap;
Following the swap, your ETH is deposited on the Lending Protocol (AAVE V2) as collateral and USDC is borrowed against it;
Finally, the amount of USDC that was borrowed from the flash loan is paid off;
As a result, now you have exposure to ETH by leveraging your stablecoins. If the ETH price increases over time according to your expectations, you could close your position and book the profits.
Opening a Short position
The short position is for those users who are bearish on market conditions and seek to profit from price depreciation of assets against fiat stablecoins.
When you open a new short position, let's say for ETH using your USDC, the following steps take place within the transaction:
You borrow additional USDC through a flash loan from CHFRY in order to leverage your position and increase your purchasing power;
Your USDC is deposited on the Lending Protocol (AAVE V2) as collateral and ETH is borrowed against it;
The borrowed ETH is swapped for USDC on Uniswap;
Finally, the amount of USDC borrowed from the flash loan is paid off;
As a result, now you have exposure to ETH by leveraging your stablecoins. If the ETH price decreases over time according to your expectations, you could close your position and book the profits.
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