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/biz/ - Business & Finance

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18995591 No.18995591 [Reply] [Original]

I know something must be wrong with this picture but I'm too stupid to figure it out. Say I deposit 100 link into Aave as collateral, and use it to borrow 50 link (1.5x leverage). Aave says it will liquidate my loan if the value of my loan exceeds 70% the value of the collateral. Is it not possible to get liquidated in this case, since the value of my loan will always be 50% of the collateral? The idea of risk-free leverage is obviously too good to be true, so what am I missing?

>> No.18995691

>>18995591
Borrowing link is only useful if you intend to short sell. You don’t get to just hold the borrowed link and profit when number go up

>> No.18995743

>>18995691
Am I not going to be able to trade the aLink collateral back to link at a 1:1 ratio? Because it seems to me that's the only way what you're saying makes sense. Inb4
>Cash out
>He doesn't know

>> No.18995912

I'd like to know this too

>> No.18996192

>>18995591
you could use that 50 link to borrow 25 link that would be cool

>> No.18996460

>>18995691
>>18995743
Okay I think I'm beginning to understand. This isn't a viable way to leverage long because you pay back the same amount of borrowed link to the lender, meaning the lender captures the value of any link price change that happened while you held the loan.
>t.retard

>> No.18996510

all I know is aave Maria is our savior through these rough times.

>> No.18996565

>>18996460
Borrow stablecoin retard.

>> No.18996589

>>18995591
>>18996460

OP just borrow DAI and use the DAI to buy link dude. You were close

>> No.18996605

>>18996460
Borrow stablecoin
Purchase new link with stablecoin
Deposit link back into aave to increase health
Sell link once it accrues in value enough to cover the stablecoin loan
The difference is now yours

>> No.18996680
File: 59 KB, 867x685, hurr.jpg [View same] [iqdb] [saucenao] [google]
18996680

>>18996565
>>18996589
>>18996605
Thanks frens

>> No.18997186
File: 231 KB, 1699x1920, 30grof.jpg [View same] [iqdb] [saucenao] [google]
18997186

>>18996605
>Borrow stablecoin
>Purchase new link with stablecoin
>Market crashes
>You lose
gamblers