Leverage / Earning as an LP
Leverage
Earning as an LP
Deposit USDG on Earn. That capital is the other side of every 2x and 3x ticket. You earn fees, carry, and trader losses. You pay when traders win.
#Two tranches
| Senior | Junior | |
|---|---|---|
| Who | Anyone, via Earn | First-loss buffer, seeded at deploy |
| Losses | Hit only after junior is gone | Take the first hit in full |
| Income | 70% of fees and absorbed margin | 30% |
Senior is not principal-protected. Junior is a buffer, not insurance. Anyone can top up junior on-chain; only admin can withdraw it. The app does not expose junior deposits.
| If | Trader | Vault (LPs) |
|---|---|---|
| Price goes your way | Profit, capped by the $1 outcome | Pays you, junior first |
| Price goes against you | Loss, never more than margin | Keeps the shortfall |
| Hits liquidation | Position closed. Margin gone. | Takes what is left |
#How you get paid
A deposit mints shares. Fees raise the tranche’s assets; your share count stays put, so each share is worth more. Nothing to claim.
| Source | What it is |
|---|---|
| Entry / exit fees | 1.5% of size each side. Paid whether the trader wins or loses. |
| Carry | 1 bp/hour on the borrowed slice, taken on close. |
| Trader losses | Closed at a loss, or the whole remaining margin on liquidation. |
The 1% entry spread is not a separate transfer. It worsens the trader’s entry, so it shows up in their P&L at settlement.
#What is locked
On open the vault locks the worst it could owe, not the borrowed slice. A long to $1 can owe more than the top-up. A short can owe the whole size. Reserving less would leave winners unpaid.
#Withdrawals
- No lockup, cooldown, or queue.
- You can only withdraw free capital, not what is locked behind open tickets.
- At most 30% of TVL can be locked, so most of the pool stays withdrawable.
That reservation is why a $100 vault at the cap backs about six $5 tickets, not twelve.
#The two APRs on Earn
- In use is realised: senior income over a recent window, annualised. No history under a day means no number.
- Est. is a model from assumed trade volume. More deposits do not create more trades, so compounding barely lifts APY.
Do not treat either as a promise. Absorbed margin is the largest and least predictable piece. Formulas: mathematics.
#Risks
- A run of winning traders drains junior, then senior.
- A stalled price feed pauses liquidations while losers stay open.
- Admin can change every parameter, pause deposits, and withdraw junior. Intended to be a multisig.