Multiply simplifies leveraged strategies, but leverage cuts both ways. Keep these points in mind to manage liquidation risk.
Leverage amplifies losses, not just gains
Multiply amplifies downside as well as upside. If the strategy performs poorly, losses can be larger and happen faster than in an unleveraged position.Watch your borrow rate
Every Multiply position carries variable-rate debt. If borrow demand rises and rates climb, profitability can fall or turn negative. For some strategies, this is the main risk.Keep your LTV below the liquidation threshold
If your position’s LTV rises above its liquidation threshold, part of the position is liquidated until it returns to a healthier LTV. How much room you have depends on the strategy type:- LST, RWA, and stablecoin strategies: collateral is generally pegged or closely linked to the debt token, so liquidation risk mainly comes from elevated borrow rates over time (closer to a carry trade).
- Directional strategies (e.g. JLP, xStocks): collateral is not pegged to the debt token, so risk comes from both rising borrow costs and the collateral price falling (closer to a leveraged long).