💲Leverage Strategies

Leveraging allows you to amplify your investment returns by using borrowed funds or by reinvesting your gains. TermMax offers efficient and user-friendly ways to leverage your positions, catering to both novice and experienced DeFi users. Below are the main leverage strategies available on TermMax.

One-Click Leveraging with Gearing Tokens (GT)

TermMax simplifies the process of leveraging by offering Gearing Tokens (GT). With just one click, you can purchase GT, which represents a leveraged position in yield-bearing assets. This method automates the traditional looping strategy, saving you time and reducing transaction costs.

How It Works:

• Purchase GT: Buy Gearing Tokens directly on TermMax. This action automatically leverages your position by looping your assets within the platform.

• Automated Looping: The smart contract handles the process of borrowing and reinvesting, effectively increasing your exposure to the underlying yield-bearing asset.

• Manage Liquidation Risk: TermMax manages the liquidation parameters, but it's important to monitor your leveraged positions, as market volatility can affect your risk of liquidation.

Benefits:

• Ease of Use: No need to perform multiple transactions or interact with different protocols.

• Cost Efficiency: Reduced gas fees due to fewer transactions.

• Time-Saving: Automates complex leveraging processes.

Borrow at Low Fixed Rates for External Leveraging

Another strategy involves collateralizing your assets on TermMax to borrow funds at a low fixed interest rate. You can then use these borrowed funds to invest in higher-yield opportunities elsewhere, effectively leveraging your initial capital.

How It Works:

• Collateralize Assets: Deposit your assets (e.g., stablecoins, yield-bearing tokens) as collateral on TermMax.

• Borrow Funds: Borrow funds at a low fixed interest rate, providing you with a predictable borrowing cost.

• Invest Externally: Use the borrowed funds to invest in other DeFi protocols or assets that offer higher yields.

• Fixed Borrowing Costs: The fixed-rate borrowing on TermMax ensures that your repayment costs are known upfront, aiding in risk management.

Benefits:

• Predictable Costs: Fixed borrowing rates help you plan your investment strategy with certainty.

• Flexible Investment Opportunities: You're not limited to leveraging within TermMax; you can explore higher-yield options across the DeFi ecosystem.

• Risk Management: By knowing your maximum borrowing costs, you can better assess the potential returns versus risks.

Combined Leveraging and Yield Farming on TermMax

Leverage your assets within TermMax by combining borrowing and lending activities. You can borrow funds at a low fixed rate and simultaneously invest in fixed-rate tokens (FT) or Gearing Tokens (GT) to maximize your returns.

How It Works:

• Borrow Funds: Collateralize your assets and borrow at a fixed rate on TermMax.

• Invest Internally:

  • Option A: Purchase Fixed-rate Tokens (FT) to earn stable, predictable income.

  • Option B: Buy Gearing Tokens (GT) to enter leveraged positions within TermMax.

• Optimize Returns: By leveraging within the same platform, you can benefit from streamlined processes and reduced transaction costs.

Benefits:

• Platform Efficiency: Keep all activities within TermMax for ease of management.

• Cost Savings: Reduce gas fees and transaction costs associated with moving funds between platforms.

• Flexible Strategies: Choose between stable returns (FT) or higher potential yields (GT) based on your risk tolerance.

Leveraging Yield-Bearing Collateral

Use yield-bearing tokens as collateral to borrow funds, effectively earning yields on your collateral while leveraging your position. This strategy enhances capital efficiency by allowing you to earn returns on both your collateral and borrowed funds.

How It Works:

• Deposit Yield-Bearing Assets: Use assets like staked tokens or interest-bearing tokens as collateral on TermMax.

• Borrow Funds: Obtain a loan at a fixed rate, using the collateralized assets.

• Earn Dual Yields:

  • Collateral Yields: Continue earning yields from your collateralized assets.

  • Invest Borrowed Funds: Deploy the borrowed funds into additional investments for extra returns.

Benefits:

• Enhanced Capital Efficiency: Maximize the utility of your assets by earning returns in multiple ways.

• Fixed Borrowing Costs: Fixed rates help in planning and reduce uncertainty.

• Diversification: Spread your investments across different assets or protocols.

Recursive Leveraging within TermMax

For advanced users, recursive leveraging involves repeatedly borrowing and reinvesting within TermMax to amplify returns. This strategy magnifies both potential gains and risks.

How It Works:

• Initial Investment: Deposit assets as collateral and borrow funds on TermMax.

• Reinvest Borrowed Funds: Use the borrowed funds to purchase more of the collateral asset.

• Repeat Process: Continue the cycle multiple times to increase leverage.

Benefits:

• Maximum Leverage: Significantly amplify your exposure to the desired asset.

• Potential for High Returns: If the asset appreciates, gains are magnified due to the leveraged position.

Strategy Overview

A variety of leveraging strategies are available on TermMax to suit different investment goals and risk appetites:

• One-Click GT Purchase: Simplifies leveraging for users seeking ease and efficiency.

• Fixed-Rate Borrowing for External Investment: Offers predictable costs for leveraging opportunities outside TermMax.

• Combined Internal Strategies: Leverage and invest within TermMax for streamlined management.

• Leveraging Yield-Bearing Collateral: Enhances capital efficiency by earning on both collateral and borrowed funds.

• Recursive Leveraging: Allows advanced users to maximize leverage but requires careful risk management.

Important Considerations

• Risk Management: Leveraging amplifies both gains and losses. Understand the risks involved, including market volatility and liquidation.

• Due Diligence: Assess the security and reliability of any external platforms, the underlying tokens and collateral tokens when investing borrowed funds outside TermMax.

• Monitoring Positions: Regularly check your leveraged positions to manage risks effectively.