Shorting Assets
Users can short an asset in one single transaction
1) You can find the "Short" function either on the individual assets market page, or on the Dashboard. Choose an asset to short, and then click on the "Short" button
2) For Step 1: Select the amount you want to long
"Long" refers to the asset you want to deposit as collateral on Tectonic.
You may be able to long tokens that you do not hold in your wallet, as your existing collateral will be borrowed against to create the leverage position. But certain constraints apply for this condition to be applicable (see the Q&A section below for more information).
3) For Step 2: Select your desired borrowing level
Borrowing level represents the overall lava bar of your exposure on Tectonic. You can refer to the Liquidation section to understand more on how this is calculated.
It is recommended to maintain your borrowing level below 50%. However, there are certain conditions where this may not be possible. (see the Q&A section below for more information).
4) For Step 3: Select which DEX you want to conduct the swap on. You will need to check off the T&C to complete this step
You also have the option to choose/customise the slippage tolerance for the swap
5) Once all steps are completed and valid, click “Short”, and confirm your transaction on your Wallet
6) Upon successful confirmation, you would have successfully swapped out your collateral
There may be a few reasons for this:
- 1.You are currently supplying this asset on Tectonic. You cannot short (i.e. borrow) a token that you are already supplying.
- 2.The token you have selected is not supported or available on our integrated DEXes (VVS Finance and WOWMAX)
- 3.You're not an existing user of Tectonic and have no capital on the protocol (i.e. no existing assets supplied as collateral in the chosen isolated pool)
Your final long and short position is calculated based on the following variables:
- 1.How much collateral you currently have supplied to the following isolated pool.If you have existing collateral, it may be used to borrow against if not currently utilised elsewhere
- 2.How much you currently have borrowed from that isolated pool
- 3.How much you want to long (on the Shorting feature)
- 4.What your borrowing level (i.e. lava bar) is
- 5.The various collateral factors of your supplied assets
- 6.Token exchange rate after accounting for swap parameters, fees and slippage
- 1.If you have existing collateral supplied to the isolated pool, then you are generally eligible to long an asset even if you don't hold it in your wallet. This is because we will use your existing collateral to borrow against if not currently utilised elsewhere.
- However, do note that this also depends on your chosen borrowing level (see the question below for more details on this).
- 2.If you're not an existing user of Tectonic and have no capital on the protocol, you WILL NOT be able to long an asset you don't own.
There may be a key reason for this:
- 1.Your borrowing level is too low based on the amount you want to long: this situation will result in a negative final short balance, which will make the transaction void. In such a case, you will be prompted to increase your borrowing level. Do note, however, that increasing your borrowing level also increase your overall risk exposure.
I am able to long an asset I don't hold in my wallet - but the maximum amount I can input in Step 1 is $0. Why is that?
You were able to long an asset not in your wallet because you have existing collateral supplied to the isolated pool.
However, Step 1 represents the initial capital you are looking to put up as collateral. Naturally, you cannot supply (i.e. long) an asset that you don't have.
Instead, we will use the existing collateral you have to complete this short position.
For example, if you:
- Currently hold USDC as collateral in the Main Isolated Pool
- Want to long USDT (wallet balance = $0) and short ABC
In such a case, your USDC will be used to borrow ABC. Thereafter, ABC will be swapped for USDT, and this USDT will be deposited back onto Tectonic.
As a result, your final exposure on Tectonic will be:
- Hold USDC as collateral
- Hold USDT as collateral
- Owe ABC as debt
Last modified 20d ago