Leverage increases both gains and losses
Multiply does not just amplify upside. It also amplifies downside. If the strategy performs poorly, losses can be larger and happen faster than in an unleveraged position.Borrow rate risk
All Multiply positions depend on variable borrowing costs. If borrow demand increases and rates rise, position profitability can fall or turn negative. For some strategy types, this is the main risk.Liquidation risk
If your position’s LTV rises above its liquidation threshold, part of the position will be liquidated until it returns to a healthier LTV. The exact liquidation risk depends on the type of strategy:- LST, RWA, and stablecoin strategies: the collateral is generally pegged or closely linked to the debt token, so liquidation risk mainly comes from elevated borrow rates over time. These are more similar to a traditional carry trade.
- Directional leverage strategies (e.g. JLP, xStocks): the collateral is not pegged to the debt token, so risk comes from both rising borrow costs and the collateral price falling relative to the debt. These are more similar to a traditional leveraged long.