Understanding Leveraged Trading

How Leveraged Positions Work

When you open a leveraged position on Lavarage, the protocol amplifies your exposure by borrowing from liquidity pools.

The Mechanics

Opening a 3x Long SOL position with 1 SOL collateral:

1. You put up 1 SOL as collateral
2. The protocol borrows 2 SOL from a lending vault on Lavarage
3. The 3 SOL is swapped into the collateral tokens via Jupiter
4. An on-chain spot margin position now holds ~3 SOL worth of the collateral tokens

Profit & Loss

Long position:

• SOL price goes up 10% → you gain ~30% (3x leverage × 10%)
• SOL price goes down 10% → you lose ~30%

Short position:

• SOL price goes down 10% → you gain ~30%
• SOL price goes up 10% → you lose ~30%

Closing a Position

When you close:

1. Position tokens are swapped back to the quote token (via Jupiter)
2. Borrowed amount + accrued interest is repaid to the pool
3. Protocol fee (1% of closing position size) is deducted
4. Remaining balance goes back to you

Interest & Fees

Position Lifecycle

ONCHAIN → EXECUTED → CLOSED
                   → CLOSED_EXECUTED
                   → LIQUIDATED

• ONCHAIN — Transaction confirmed, position detected by listener
• EXECUTED — Position fully synced with on-chain state
• CLOSED — Close transaction confirmed
• LIQUIDATED — Position was liquidated (collateral insufficient)