Short
When a Short is useful
Say you got 15 USDC, and you think EGLD will go down in the future
You would like someone to lend you EGLD so that you can buy more USDC
Later on you need to repay the EGLD debt, but thanks to EGLD's decreased value you need to spend less USDC, and leftover USDC goes into your wallet as a profit
Example
You start a 4x EGLD Short on XOXNO with 15 USDC, ending up with 60 USDC @ 1$ as collateral and 3 EGLD @ 15$ as debt
If EGLD goes down X%
You win 3X%, because you can cheaply repay 3 EGLD instead of just 1 EGLD
To start the position, 3 EGLD were swapped to 45 USDC
To close the position, you need to spend less than 45 USDC to repay the 3 EGLD (because EGLD became less valuable)
The leftover USDC after repaying the EGLD goes in your wallet
If EGLD goes up X%
You lose 3X%, because you need to expensively repay 3 EGLD instead of just 1 EGLD
To start the position, 3 EGLD were swapped to 45 USDC
To close the position, you need to spend more than 45 USDC to repay the 3 EGLD (because EGLD became more valuable)
You need to use part of your initial collateral to repay the EGLD debt (because 45 USDC are not enough anymore), so that you may get back e.g. just 12 USDC instead of your initial 15 USDC
Advanced Short
In the previous examples, you were always Shorting EGLD against a stable coin like USDC
But you can actually Short any coin against any coin
So you can 4x Short EGLD against XOXNO, WETH, WBTC, or any other supported market
Be aware that when shorting a volatile token against another volatile token, you get influenced by both token's price fluctations
For example, when Shorting EGLD against XOXNO
You profit when
EGLD goes down (because you'll need less XOXNO to repay the EGLD debt)
XOXNO goes up (because you'll need less XOXNO to repay the EGLD debt)
You lose when
EGLD goes up (because you'll need more XOXNO to repay the EGLD debt)
XOXNO goes down (because you'll need more XOXNO to repay the EGLD debt)
Last updated
Was this helpful?