Margin Swap

The Margin Swap feature in rain.fi enables users to perform leveraged trades without the risk of price-based liquidations. By locking the deposit and loan amount as collateral, users can gain financial leverage with enhanced flexibility and reduced risk.

---

How Margin Swap Works

• Collateralization:

  • Both the user's initial deposit and the loan amount are locked as collateral.

  • The user does not receive tokens until the loan amount is fully repaid.

---

Leverage Slider

• Users can determine the leverage ratio using the leverage slider.

• The leverage amount is directly influenced by the pool’s Loan-to-Value (LTV) ratio:

  • Higher LTV pools allow for greater leverage amounts.

  • Lower LTV pools provide more conservative leverage options.

This flexibility ensures users can customize their risk and potential reward according to their trading strategies and the available pool conditions.

---

Available Options for Margin Swap

1. Repay and Retrieve Collateral:

   • Repay: By choosing to repay, you unlock the collateral funds. However, you'll need to settle the outstanding loan amount in full to regain access to the locked assets.

   • Upon repayment, the user receive collateral.

2. Extend the Loan:

   • Extend the loan term if additional time is needed for repayment.

   • This option helps maintain flexibility in financial management.

3. Market Sell:

   • With this option, your deposited collateral is sold, and the proceeds are used to repay the loan automatically. You'll receive the remaining amount after deducting the loan balance—this could include profits if the trade was successful or a reduced amount if the trade resulted in a loss.

   • The loan is repaid automatically from the proceeds, and the user receives the remaining balance.

---

Key Benefits of Margin Swap

1. Leveraged Trading Without Liquidations:

   • Unlike traditional leverage trades, Margin Swap eliminates the risk of price-based liquidations.

   • Users have full control over the outcome without forced closures due to market volatility.

2. Flexible Options:

   • Multiple repayment and liquidation options allow users to adapt to their financial circumstances.

3. Simplified Collateral Management:

   • All transactions, including collateral handling and repayments, are managed seamlessly through the RainFi platform.

---

The Margin Swap feature is ideal for traders seeking leveraged opportunities without exposure to price-based risks. It empowers users with advanced trading tools while maintaining stability and control.