With ETH hitting new all-time highs, many are looking for ways to increase their ETH exposure. While I normally focus on ways to earn yield for providing or lending liquidity in DeFi, there is one tool I enjoy using to automate stacking more ETH called DeFi Saver.
DeFi Saver Automation enables a permissionless and trustless automated management system for collateralized debt positions (aka DeFi loans like Maker vaults). Based on user configurations, it increases or decreases leverage as the price of underlying collateral asset (ie ETH) goes up or down, effectively providing automatic leveraging and liquidation protection.
Here’s how DeFi Saver Automation works whether you use it with MakerDAO, Compound or Aave v1 (Aave v2 coming soon!):
- You set 2 main parameters: BOOST vs REPAY
- REPAY protects you from liquidation. It means “if my collateralization ratio for my loan drops to X%, sell some of my ETH for DAI and repay enough DAI to get back up to Y%.” An example is “if my Maker loan drops to 170%, sell ETH and repay DAI to get me back to 190%.”
- BOOST is an optional parameter to increase your leverage. It works like this: “if my c-ratio for my loan increases to 230%, draw more DAI, buy more ETH, and deposit into my vault to boost my ETH exposure so c-ratio is 210%.”
- Each adjustment made by DeFi Saver Automation will have a service fee of 0.3% of the Repay or Boost amount–so consider how often these should trigger based on that fee.
While there are risks to using DeFi Saver, it fortunately is a battle-tested product boasting the following numbers:
- $291,500,000 in trade volume in 2020
- 36,000 unique transactions
- Grown from 160 automated positions in MakerDAO to 650 automated positions across MakerDAO, Aave, and Compound
While there are risks to using DeFi Saver, it fortunately is a battle-tested product boasting the following numbers:
- $291,500,000 in trade volume in 2020
- 36,000 unique transactions
- Grown from 160 automated positions in MakerDAO to 650 automated positions across MakerDAO, Aave, and Compound
Keep in mind I’m not a trader so please recognize this is my lazy, passive way of trading and putting my ETH to work. I only risk up to 5% of my ETH ideally when using DeFiSaver because like all DeFi applications, there’s smart contract risk always looming.
How to Automate Trading Leveraged ETH Longs in MakerDAO with DeFi Saver
Before we get started, please be aware of a few major risks.
- Despite audits, DeFi Saver could have a bug where funds are exploited.
- There’s systemic risk in all the money legos linked to using DeFi Saver like Aave, Compound, and MakerDAO.
- Remember that each adjustment made by Automation will have a service fee of 0.3% of the Repay or Boost amount. If one were to set Boost or Repay parameters too close together in a choppy market, one could see their position being depleted by fees.
- Holding a leveraged position of ETH (even with these Automation features to protect against the downside) is not a 100% guarantee you won’t be liquidated. DeFi Saver did prove itself one of the most battle-tested and reliable players in this space on Black Thursday March 12th, 2020, but there’s always systemic risk in DeFi and unforeseen events we worry about crashing oracle-based markets like this in DeFi. Learn more about what they’ve done to protect their users from a Black…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
