What is Leverage?
Leverage means using borrowed funds to increase your position size beyond your capital. 2x leverage means controlling $200 with $100.
In DeFi
- Lending loops: Deposit, borrow, deposit again
- Perps: Trade with leverage on GMX, dYdX
- Margin: Borrow against collateral
Risks
- Amplified losses
- Liquidation risk
- Funding costs