Detailed Policy of Leverage Farm
Price oracle
Price criteria related to the calculation of the leverage size available when depositing assets and liquidation based on the asset debt ratio are measured and applied through Price Oracle (Different from the pool exchange ratio).
Stable coins are calculated as fixed values ($1.0).
Determination of value for other coins, considering the scale of liquidity of each asset, is based on the median value of the price in central exchanges such as Binance, Upbit, Bithumb, Coinone, Huobi, and gateio, and pool exchange ratio (price) in Meshswap.
Yield rate, cost, expected returns
Degree of returns (%), and borrowing costs (%) can vary depending on the real-time status of the farming pool and the lending pool.
The total expected return on the Leverage farm is calculated as (total annual return-total annual cost). The total annual rate of return (APR) includes MESH APR and airdrop APR, and the total annual cost refers to the cost of borrowing assets by Leverage farmers.
MESH APR (%) and Airdrop APR (%) refer to the annual rate of return (APR) expected to be obtained from MESH and Airdrop tokens distributed from the pool.
Borrowing cost (%) refers to the interest rate (APR) that takes the annual interest cost to be paid when utilizing assets in a lending pool into account when using Leverage farm.
All figures are real-time estimates and may differ from the actual rate.
Deposit policy
Users can directly enter and deposit any amount of asset under the current exchange ratio (price) or free rate of the pool.
Users can choose how much additional asset they are willing to utilize in dollar value through the leverage multiplier settings. Additional assets will be utilized by the size of (value in dollars of deposited assets) * (selected leverage multiplier -1).
For additional asset input, the user can choose which asset to utilize. The selected asset is borrowed from a lending pool, and the user must return the amount of the utilized asset, including the interest fee accumulated according to the real-time borrowing cost (%) of the utilized asset. The larger the leverage multiplier, the more assets you get to utilize and pay for interest fees.
Depending on the amount of user's deposited assets, selected leverage multiplier, and type of utilized assets, a certain percentage of your asset is automatically swapped (traded) to deposit the pair at an optimal ratio. In cases where swap is required, it takes a direct single swap pass between the pair, incurring a corresponding transaction cost. Transaction fees follow the corresponding transaction fee rate by pools. (For example, if you need a swap during the leveraged yield farm process of the MATIC + MESH pair, an exchange between MATIC <> MESH will occur, and the transaction fee rate of the pool will be applied.)
The larger the transaction, the more influential it affects the exchange ratio between tokens in the pool, which can make a difference between the current price and the price applied when exchanging (Price impact). If you run it with small quantities several times, you can reduce its influence.
Leverage Farming is carried out after excluding the fee incurred during the swap. Depending on the size of the transaction, there may be a difference in the price applied at the time of the exchange (Price impact), so the leverage farm may not proceed with the leverage multiple selected by the user and the completely correct scale.
To prevent such cases, deposits(for leverage farm) are carried out only within the transaction range set at the time of swap (slippage is 1%), and if it exceeds, the deposit transaction may not proceed (Revert). Please check all the relevant information in the forecast section at the bottom before depositing.
By depositing in pairs(in the farm), the asset value continues to fluctuate, and an liquidation occurs when the debt ratio exceeds 85%. The debt ratio refers to the ratio of the value of the utilized assets to the value of the deposited assets. Therefore, be sure to check the debt ratio and return policy.
Withdrawal policy
If a user requests withdrawal, the asset being utilized gets returned first. If you have returned all the assets you are using, you can withdraw the remaining assets and receive them in your wallet.
In the withdrawal menu, users can check the total LP Token quantity, which is currently the total asset deposited, and also the amount of the LP Token corresponding to my assets and leverage assets, respectively.
If the user withdraws the LP Token corresponding to the leveraged asset, the LP Token is used to return the asset being utilized. You can check the detailed quantity of LP Token used for return at the Return asset area, and the precise quantity receivable in your wallet can be checked in the 'You Get' section.
If the LP Token quantity corresponding to leverage assets is 0, the user can withdraw the assets into the wallet by entering the quantity of LP Token equivalent to my assets.
Depending on the size of the transaction at the time of withdrawal, there may be cases where all assets used may not be returned even after the total withdrawal of the leveraged asset due to the change of the price applied at the time of exchange (Price impact). To prevent this case, the deposit will only proceed within the transaction range set at the time of swap (slippage 1%), and if it exceeds that range, the deposit transaction may not be processed. (Revert)
Policy on liquidation regarding debt ratio (%)
Leverage farmers have to pay the corresponding cost instead of maximizing MESH reward efficiency by borrowing additional assets. Costs are included in the utilized assets minute by minute, and the user can withdraw the assets after returning all the utilized assets including the costs.
At this time, the liquidation may proceed if the ratio of the utilized asset (asset utilization ratio) to the user's total asset deposited exceeds 85%.
Debt ratio is calculated as follows. Debt ratio (%) = (dollar value of amount of asset utilized/ dollar value of total asset deposited)*100
Since the debt ratio may show volatile fluctuation due to a decrease in the total value of deposited assets or an increase in the value of utilized assets, users must periodically check the debt ratio to prevent liquidation.
To prevent liquidation, you either lower the debt ratio by depositing assets with a low leverage multiplier or manually return your asset by withdrawing your asset in withdrawal tap.
Upon liquidation, the assets currently being utilized by my assets are returned first, excluding theliquidation fee (20%) from the remaining assets, and the user can directly receive the assets (including remaining assets, MESH rewards, and Airdrop assets). If swaps occur during the liquidation process, depending on the size of the transaction, all assets utilized may not be returned due to a change in price applied at the time of exchange (Price impact). In this case, all utilized assets must be returned by using my asset deposited, so there may be no assets that the user can receive even after the liquidation.
Receiving remaining assets can be processed in the [Liquidation history] tab by clicking the [Asset Details] button in the ‘Asset deposited’ area at the top.
The liquidation fee (20%) is used as a safety fund for returning lending pool assets that have not yet been returned due to rapid price fluctuations.
Terminology
Asset deposited
‘Asset deposited’ indicates the current value of total asset deposited, a summation of my asset and leverage asset.
My asset
Asset deposited - borrowed asset
Leveraged asset
Additionally deposited asset through Leverage farm. In case of withdrawal, asset currently being borrowed would be returned using leverage asset.
Borrowed asset
Asset borrowed from a lending pool for Leverage farm, and at the end of Leverage farm, it must be returned including accumulated interest fee according to the asset borrowing cost (%) for each asset.
Debt ratio (%)
Ratio of asset borrowed to total asset deposited
Liquidation
If the debt ratio exceeds 85%, and from the remaining assets, users can receive the amount of asset except for the liquidation fee (20%) after the return is completed.
Total APR (expected) (%)
= MESH APR - borrowing cost + airdrop APR
MESH APR (%)
Rate of return for MESH rewards
Borrowing APR (%)
Annual interest cost of assets utilized by Leverage farmers, and the actual cost may vary depending on the scale of the user’s deposited assets, leverage multiplier, and the amount of assets utilized.
Airdrop APR (%)
Additional reward for liquidity providers of pools, and the rewards depend on the share ratio of individual users.
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