How to Leverage Farm Safely
Leveraged yield farming can multiply returns but also losses. Here is how to do it with proper risk management.
Leverage Risks
| Leverage | Return Multiplier | Liquidation Risk |
|---|---|---|
| . . . . . | . . . . . . . . . - | . . . . . . . . . |
| 1x | 1x | None |
| 2x | 2x | Medium |
| 3x | 3x | High |
| 5x+ | 5x+ | Very High |
Risk Management Rules
- Never use max leverage
- Maintain buffer above liquidation
- Monitor daily
- Have exit strategy
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Step-by-Step Instructions
1
Understand Liquidation
Know exactly at what price you get liquidated.
Warnings
- ⚠Leverage can wipe out your entire position
2
Start with Low Leverage
Begin with 2x max. Increase only with experience.
Tips
- ✓Many pros stay at 2-3x
3
Calculate Buffer
Leave at least 30% buffer above liquidation price.
Tips
- ✓More buffer = sleep better at night
4
Monitor Health Factor
Check health factor daily. Below 1.5 is danger zone.
Tips
- ✓Set up alerts on Fensory
5
Have Exit Plan
Know exactly what you will do if price drops X%.
Tips
- ✓Pre-set stop losses if available
6
Deleverage in Profit
Take profits by reducing leverage, not just adding more.
Tips
- ✓Greed is the enemy