June 10, 2022
Borrowing is one of the core actions within DeFi: it's a great way to generate additional yield with assets you intended to hold anyway, especially with Liquity's interest-free loans. However, it also comes with additional requirements, as a responsible user one should monitor one's position and adjust it if needed.
What if we told you there is a way to harness the power of leveraged positions without needing active management from your end? Enters DeFi Saver's Liquity integration.
About a year ago, DeFi Saver released an integration of Liquity to streamline the Trove management process for people looking for leverage on ETH. Since then, many updates have been released, making DeFi Saver one of the most, if not the, most feature-rich Frontend for Liquity. This post will explore the various features DeFi Saver offers to simplify the Trove management process, enable easy migrations from other lending services, and much more!
While this article discusses the DeFi Saver x Liquity integration, this is not a tutorial. If you are discovering DeFi Saver with this post, consider checking the integration introduction article published at the time of the first release.
To make sure you are in the know about all subtleties of a given protocol before interacting with it, DeFi Saver offers an impressive and widely appreciated tool called “Simulation Mode.” It’s essentially a mock version of the DeFi Saver interface where you are credited with 100 (fake) ETH (you can also simulate an existing account). Using this mode, you can simulate all the interactions you intend to perform, with everything accounted for, including the gas costs.
The Simulation Mode supports most of the features available in the real version and includes all the (mock) transactions you need to sign to perform a given operation. So it gives you an exhaustive overview of what the reality will be like.
To enable it, use the toggle at the bottom left of the DeFi Saver interface:
If you are opening a Trove for the first time, we recommend you try the process via Simulation Mode first. It’s an excellent no-risk yet realistic playground to make sure everything is clearly understood before moving forward.
Now that the stage is set, let’s dive into the many features DeFi Saver offers to simplify the management of your Liquity Trove.
Automation is probably the star feature of DeFi Saver, as it enables no-stress management of a leveraged position. Essentially, they are simple sets of rules that you can define and that will be triggered automatically once a certain ETH price threshold has been reached.
The stop-loss automation helps you avoid liquidations without requiring continuous monitoring and management from your end. It’s a simple rule that goes as follows:
“If ETH price goes below XXXX (your choice), close my Trove and withdraw the remaining balance in ETH or LUSD (your choice).”
When this feature is triggered, DeFi Saver will automatically pull the necessary amount of ETH from your Trove, sell it for LUSD and repay the debt. While it’s sad to sell ETH, it helps you avoid liquidations and the additional fees that come with it: safety first!
Now that your back is covered, know that the same feature exists the other way around, enabling you to automatically secure profits in ETH or stablecoins once the ETH price goes over a certain threshold. Here again, you can choose if you want to take your profits in ETH or LUSD.
Both features can enable an almost fully automated management of your Trove, especially if you are using it to grow a leveraged ETH exposure. Stay responsible and please keep in mind that the automation features need to be set up beforehand; they also require the Trove to be created via the DSProxy and incur a 0.3% service fee if executed.
On top of the much-appreciated automation features, DeFi Saver has grown into a leading Liquity Frontend offering all the features you are used to and even some more!
Depending on your goal, some interactions with Liquity can require several transactions: luckily, here again, DeFi Saver has built some neat tools to help you achieve your goal in one click.
Want to go long on ETH? Usually, that would mean the following sequence of transactions:
DeFi Saver can do all three of these operations simultaneously, with a neat interface helping you assert the resulting Trove status (the resulting state is in purple). For instance, a 100'000 LUSD boost would result in a purchase of 56.03 ETH and reduce the collateralization ratio from 283.55% to 188.28%.
It works the other way around too! Want to reduce your debt by selling some of your ETH? There is yet another streamlined way to do this with DeFi Saver using the repay feature that will:
And here again, all of this with one single transaction from your end, and a nice interface helping you anticipate the final results.
Pro-tip: Notice the “Debt in front” tooltip on your Trove recap? It’s a critical piece of information to have, as it helps you assess your chance of having your Trove redeemed. Make sure you are comfortable with the figure you see there: the more debt in front of you, the more buffer there is for you. If you are a user of Liquity, the responsible thing to do is to understand how Redemptions work.
This one is fresh off the press. During the latest update of the Liquity integration, the DeFi Saver team added another useful feature, building on top of Repay. Here, there are several options available depending on your needs:
Maybe you are not enjoying the interest-free and capital-efficient borrowing Liquity offers yet because your assets are already committed to another more costly protocol such as Maker, Compound or Reflexer? The DeFi Saver team has you covered with a feature using flashloans to easily migrate your position from one lending protocol to another. While this feature involves a 0.1% service fee, it proves handy to manage and rebalance positions.
You can also check this tweet for a visual representation of the migration.
As said above, DeFi Saver is now a fully-fledged Liquity Frontend with the many benefits we just highlighted. All basic features are also available directly on DeFi Saver, such as depositing your LUSD to the Stability Pool, staking your LQTY tokens to earn a share of the protocol’s fees, and even redemptions!
We hope that this article helped you better understand how to make the most out of your Trove with the help of DeFi Saver. When it comes to Liquity, this article is quite exhaustive: however, one of the strengths of DeFi Saver is the wide range of lending protocols it supports.
If you are using other lending services as well as Liquity, check the other features DeFi Saver offers: you might be particularly interested in the Recipe Creator, providing a streamlined way to create and execute any arbitrary sequence of DeFi protocol interactions you might need.