STRATEGIES
Leverage (Financial Leverage)
Definition
Leverage allows traders to control larger positions than their capital would normally allow by borrowing funds. In DeFi, leverage amplifies both potential gains and losses through borrowed capital.
Example
Example
With 3x leverage, you can control $3000 worth of ETH with only $1000 of your own capital, amplifying both gains and losses by 3x.
Risks to Consider
Risks
- Amplified losses
- Liquidation risk
- Interest costs
- Market volatility
