Leveraging

Leveraging Overview

Omnipair allows users to efficiently gain leveraged exposure to any token pair through recursive borrowing within isolated pools. Unlike traditional margin exchanges or lending protocols, Omnipair is permissionless and does not rely on external oracles, enabling leverage even on long-tail assets.

How Recursive Leverage Works:

To achieve leverage, a user follows these steps within the same pool:

1. Deposit Token0 as collateral.

2. Borrow Token1 against deposited collateral (up to collateral factor limits).

3. Swap borrowed Token1 to Token0 (increasing exposure to Token0).

4. Repeat steps 1-3 to multiply exposure.

This iterative process effectively magnifies exposure to the desired asset, limited by the Collateral Factor (CF) of the pool:

$$\text{Maximum leverage} = \frac{1}{1 - CF}$$

For example, if (CF = 85%), maximum leverage achievable is:

$$\frac{1}{1 - 0.85} = 6.67\times$$

Advantages of Omnipair’s Leveraging Model:

• Permissionless: No governance approval needed for new asset leverage.

• Isolated risk: Each pair operates independently, eliminating cross-pool risk.

• Efficient utilization: Liquidity is continuously productive.

• No oracles: EMA price mechanisms eliminate oracle manipulation risks.

Leveraging through Omnipair enables sophisticated trading strategies and capital efficiency unavailable in traditional AMMs or lending protocols.