FAQs
What would someone from traditional finance describe Lavarage as?
A decentralized on-chain prime brokerage platform.
Who is on the team building Lavarage?
The core team of Lavarage comes from diverse experience in traditional finance, gaming and blockchain technology. One of the things our team members have in common is that we are all engineers by training (nerds!) and we all love to trade (degens!).
We built this product because we wanted to use it ourselves and we are a bit frustrated with the UX of some of the existing DeFi platforms (boomers!).
Drop by our Discord anytime to speak with our team.
Why is your brand “Lavarage”?
Isn’t it obvious that lavarage sounds like…leverage? Our dream is to build technology that would allow every degen to experience the thrust of riding erupting lava to the moon.
How does spot margin trading on Lavarage work?
Lavarage is a liquidity layer built on top of existing DEXs. This layer is two-sided with liquidity providers on one end and traders on the other end. Liquidity providers can deposit funds and open up margin liquidity pools for any token that has liquidity on existing DEXs. Traders can buy tokens with leverage by borrowing funds from the liquidity pools.
How is a leverage position opened?
Let’s say Trader Bob wants to buy $WIF at 2x leverage using 10 SOL:
Prerequisites: Bob needs to have more than 10 SOL and there is at least one liquidity pool that supports $WIF for up to 2x leverage
10 SOL (i.e. the initial margin) from Bob’s wallet and 10 SOL (i.e. the borrowed amount) from the liquidity pool is used to purchase 20 SOL worth of $WIF on existing DEXs, e.g. Orca
The $WIF tokens purchased are the collateral for the margin position and they are locked up in a smart contract until the leverage position is closed.
Why does my open position transaction fail?
Some of the more common reasons why the transaction might fail are:
The network is congested
The market is volatile and the slippage limit is set too tight. You can increase the limit and try to open the position again.
Reach out to us anytime in Discord if you ever encounter any problem! You can open a ticket in the #support channel.
How can a leverage position be closed?
There are 3 ways an open leverage position can be closed. 1. Repay
The trader can repay an open position by sending the amount equivalent to the outstanding loan, i.e. borrowed amount plus interest, and the collateral tokens will be sent to the trader’s wallet.
2. Sell
The trader can initiate to sell the collateral tokens given that the value of the collateral is greater than or equal to the outstanding loan. After the tokens are sold, the proceeds are used first to repay the lender for the outstanding loan. The remaining amount, if any, is returned to the trader’s wallet.
3. Liquidate
When the LTV of the position is equal to or greater than the liquidation LTV (see key parameters), the lender can liquidate the position and the collateral tokens are sent to the lender’s wallet.
How can I view my positions?
You can see all your Open and Closed positions in the “Positions” tab. It is normal that a newly opened position might sometimes take up to a couple minutes to show up in the Open Position page.
Can lenders recall my loan?
Not at the moment. You can keep your position open for as long as that the position’s LTV is below the liquidation LTV threshold. Loan recall is a feature that will be rolled out in the future.
Can I close a position or deleverage it partially?
Not at the moment. We have plans to add this feature later but as of right now, you can only fully sell or repay to close your positions.
Can I add to my open position?
Not at the moment. We have plans to add this feature in later but as of now, you can open as many new isolated positions as you like for the same token.
Do I have to deposit funds to start trading on Lavarage?
No - you don’t have to deposit anything upfront before making a trade on Lavarage. You do have to pay for part of the fund, i.e. the initial margin, when you open a leverage position and the tokens you purchase would be the collateral for your position.
Would I lose more than the initial margin I paid for my position?
No, the maximum amount you can lose for each position is your initial margin, i.e. the initial amount you paid. Therefore your return on investment (“ROI”) is capped at -100%. Further to that, every position is isolated.
Can I use other currencies besides SOL, e.g. USDC, to trade?
Not for now, but let’s just say that this is a popular request and we have plans to launch this in the future. In the meantime, we believe that the goal of most Solana degens should be to accumulate a bigger bag of $SOL.
Can I short tokens with leverage on Lavarage?
No short, up-only! Joking aside, we are focusing on the use case of providing leverage swap instead of margin shorting. We have a good idea of how the latter can be implemented but do not have any immediate plan to roll that out. Long-only for now.
Is Lavarage only available on the Solana blockchain?
For a few reasons, we have picked Solana to be the first chain that we deploy Lavarage on. We do have plans to go cross-chain and multi-chain in the future. Stay tuned.
If you are part of an awesome L1/L2/L3 chain and are interested to get Lavarage to deploy on your chain sooner, please reach out to us!
What is the best platform to use Lavarage on?
Lavarage is designed to be mobile-first and is optimized for an app-like experience. We would recommend using Lavarage within your preferred decentralized wallet app on your mobile phone. Lavarage is of course also perfectly usable in a desktop browser.
Providing a slick and smooth mobile-first user experience is something we invest heavily into.
What are some common use cases for Lavarage?
Day traders making shorter time frame bets can use leverage to amplify their return.
Memcoins traders trading more volatile assets can make smaller bets with leverage to reduce their downside risk and yet not miss out on the explosive upside gain.
Savvy DeFi traders using a hot/cold wallet setup can trade with leverage using their hot wallet and then repay using funds from their cold wallet to retrieve the tokens they bought. This allows the traders to keep a smaller amount in their hot wallet without missing out on opportunities to trade.
What do I have to pay to do margin trading on Lavarage?
1. Platform fee
This is charged by Lavarage and our fee structure is meticulously crafted to ensure fairness and align closely with the interests of our traders. There are two components:
Open fee: This is a one-off charge when a new position is opened. A percentage of the borrowed amount is charged and is paid on top of the initial margin that the trader has to pay.
Profit fee: A percentage of the profit made by the trader when closing a position via selling it is deducted from the amount to be sent to the trader’s wallet. If the position was closed without any profit or the position was closed via repay or liquidate, then no profit fee is charged.
2. Interest
This is paid to the lender for the amount of liquidity that was borrowed. This is not a fee paid to Lavarage.
What is the maximum leverage I can trade with on Lavarage?
Unlike the case on centralized exchanges, there is no hard limit on how much leverage you can trade with on Lavarage. This is dictated by the maximum open leverage of the liquidity pools for the respective tokens as set by liquidity providers.
Can I trade with no leverage on Lavarage?
You are more than welcome to use our front-end to trade without leverage, i.e. leverage = 1x. It would be exactly the same as if you were doing it on any other DEX front-end and Lavarage does not charge any extra fee for this.
Do note that you will not see any position record in the Positons tab for any trade done without any leverage.
What is the difference between trading with leverage on Lavarage and perpetual DEXs?
Perpetual decentralized exchange platforms (“Perp DEXs”) is the closest alternative to Lavarage in the DeFi space. Below are the main differences between Perp DEXs and Lavarage:
Lavarage offers margin trading on SPOT instruments, i.e. you are buying the actual tokens. On Perp DEXs, you can only trade perpetual futures, which is a synthetic derivative instrument. The key difference here is that on Lavarage, you can repay the loan for any open position and withdraw the tokens you bought into your own wallet. You cannot do that with perpetual futures on Perp DEXs. Furthermore, the perpetual futures you trade on a Perp DEX is likely proprietary to that platform. If that platform goes under, your positions on that platform would likely become worthless.
When you trade on Lavarage, you are always trading on liquidity from existing DEXs and getting the true market price. Since perpetual futures are synthetic instruments, they require a separate market to be formed and this is usually done by market makers. So you are more likely to be trading against professional traders when you trade perpetual futures on Perp DEXs and the price you trade the futures at could be quite different from the true price of the token.
In short, why should I use Lavarage over other existing platforms?
Lavarage’s distinctive advantages are:
More decentralized - less dependence on the platform
More opportunities - earlier or exclusive access to trade newer tokens with leverage
More interest alignment - always trading at the true market price on DEXs, not against professional traders
What is the Lava Rock NFT?
Lava Rock is a non-fungible token (NFT) that grant its holder utilities and perks when using Lavarage platform. During the Private Beta stage, only holder of the Lava Rock will have full access to the platform.
Other utilities include but are not limited to:
Reward points multiplier
Early access to new features
Fee discount
Unlike a profile picture NFT collection, the Lava Rock NFTs will not have unique traits and rarity. Instead, the Lava Rock NFTs will be released in multiple series and rumour has it that the first series will be the most exclusive (and will give its holder the highest amount of magical power).
Can I refer my friends to use Lavarage?
Yes, you will be able to refer your friends once our referral system is launched. Referrals will be rewarded through fee-sharing incentives.
Is Lavarage a DEX? How is it different from Raydium or Orca?
No, Lavarage is not a decentralized exchange (“DEX”). Instead, it is a two-sided liquidity marketplace built on top of existing DEXs. Liquidity providers supply liquidity on Lavarage purely to allow traders to trade more efficiently against existing liquidity on DEXs. We have no intention to build our own DEX and we aim to partner and integrate with all top DEXs and DEX aggregators.
Is there a reward point system?
Yes, we do have a reward point system and it exists both in our Discord and will eventually be launched as well on our platform. The points in Discord and on our platform will be of equivalent value. Points will be awarded to on-chain, in-app and other social actions. More detail will be provided soon and in the meantime, the best place to find out more is to come into our Discord and speak with our team
What tokens can I trade with leverage on Lavarage?
Any token with liquidity on DEXs and margin liquidity on Lavarage can be traded with leverage on Lavarage. There is no permissioning or listing process. When the lending module is launched, anyone can open a pool on Lavarage and start offering margin liquidity for any token.
If you have a token that you would like to start margin trading on, you should come into our Discord to speak with your community.
How can I take part in earning that exciting yield as a lender on Lavarage?
Right now lending is only open to a few of our institutional lender partners. But we will be launching the other side of our platform soon where anyone can either be a liquidity provider via staking or a lender via actively managing lending pools.
Stay tuned!
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