> For the complete documentation index, see [llms.txt](https://docs.peapods.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.peapods.finance/leveraged-volatility-farming-lvf/position-lifecycle-and-internal-mechanics.md).

# Position Lifecycle and Internal Mechanics

### **Creation of an LVF Position**

1\.   The user deposits pTKN into the LVF vault.

2\.   The protocol borrows the equivalent value of the paired asset from the LVF lending market.

3\.   The user creates a full-range LP using both pTKN and the borrowed asset.

4\.   The resulting LP token is locked as collateral within the LVF vault.

<figure><img src="/files/vPNWrftRSqHXYGQB3bcB" alt=""><figcaption></figcaption></figure>

### **Self-Collateralization:**

Because the LP position contains equal value of both the borrower’s asset and the debt asset, the vault treats this position as self-collateralizing, bringing the collateralisation rate up to 200%. This allows for 100% capital efficiency on initial the deposit value and enables direct entry into leveraged farming without requiring any initial paired liquidity asset to be supplied.

<figure><img src="/files/YwpIJyzLt84giBghk5lH" alt=""><figcaption></figcaption></figure>

### Liquidation Threshold:

The liquidation threshold is set at 83.33% LTV, which corresponds to the theoretical floor at which the borrowed asset component becomes insufficient to back its own repayment. The LP token must remain above this threshold or the position is liable to be liquidated.

<figure><img src="/files/BhF9fXSRlYOv0vJUztOy" alt=""><figcaption></figcaption></figure>

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