Visualizing Strategy Risk

The following chart illustrates how different LVF configurations affect your liquidation buffer. It shows the % decrease in pTKN required to reach liquidation, based on different leverage profiles.

Breakdown of Strategies:

• 🟢 Standard LTV (2.0x Leverage) A typical LVF setup using only the user’s pTKN and borrowed paired asset. Provides a strong buffer (up to 64%) before liquidation.

• 🟡 Looped LTV (2.33x Leverage) A more aggressive strategy where the user borrows against their LP, uses the borrowed paired asset to buy more pTKN, and loops it into a new LVF position. This reduces the buffer to 53%.

• 🔵 Withdrawn LTV (2.33x Leverage) Similar borrowing profile to the looped strategy, but the paired asset is withdrawn and not recycled back into the system. This configuration is the most aggressive, with only a 36% buffer.

These variations illustrate how strategy choice impacts liquidation risk. Leverage is not inherently unsafe but understanding how it affects your liquidation buffer and managing your strategies within your risk tolerance is essential.