Leverage Farm

zkFox conducted research on all leveraged mining products in the current DeFi space and found that the biggest problem affecting user experience is slippage and swap costs. When borrowing and lending a single currency with a leverage greater than 2, and the funds exceed a certain proportion of the current trading pair liquidity pool, there will be a certain swap cost and huge slippage loss, which can also cause imbalance in the price of the current trading pair in the DEX, leading to liquidation of some users. However, we were pleasantly surprised to find that the dual-currency borrowing and lending model, which balances user funds through borrowing and lending when users open positions, instead of through the swap process, can save users swap costs and avoid slippage issues

Advantages of zkFox leveraged mining:

1. No transaction fees: Due to the loan balance method, SWAP won’t be needed, which directly saves the user the SWAP costs;

2. No slippage: Users who have large funds and leveraged funds that’s larger than the pool will have a better experience;

3. Automatic reinvestment: The strategic contract will reinvest the mining of all positions in every 30 minutes. Every users’ opening, adding and closing positions in the pair will trigger the reinvestment.

4. Faster docking of the mining pools: We have created a contract hub design, which will creates more easy access in other third-party mining pools to find more investment portfolios for the users.

How to participate

For common users, you can participate in two different ways:

Depositors-users can deposit USDT, ETH, BTC and other assets into the Bank to earn interest and joining the mining. The funds deposited by the users will be lent to liquid miners to open leveraged mining positions, meanwhile obtain fTokens (interest-bearing tokens) from depositing assets, and pledge fTokens to obtain FOX mining income.

Miners-users can lending a variety of assets in the platform by pledged principals, and users can open multi-level leveraged mining positions to obtain higher mining income. Please note, these operations also have the risk of impermanent losses under the AMM trading rules and liquidation due to market fluctuations.

Lending and balancing leveraged mining

zkFox's leveraged mining product will mainly use the logic of balancing leverage mining through borrowing and lending, and optimize and improve it. At the same time, the leverage limit will be increased to 5x for non-stablecoin trading pairs, and to 10x for stablecoin trading pairs.

zkFox's leveraged product will mainly use the dual-currency borrowing and lending logic, and optimize and improve it. At the same time, the leverage limit will be increased to 5x for non-stablecoin trading pairs, and to 10x for stablecoin trading pairs.

For example, if User A chooses the BTCUSDT trading pair and uses 3x leverage to mine with 10,000 USDT, zkFox will balance User A's position by borrowing 15,000 USDT worth of BTC and 5,000 USDT before entering the liquidity pool. There is no need to consider swap costs.

If Rich User B wants to use stablecoin leverage for mining, they can choose the USDT/USDC trading pair. When opening a position with 100 million USDT and using 10x leverage, zkFox will borrow 400 million USDT and 500 million USDC to form LP Tokens with a total value of approximately 1 billion USDT, even if the liquidity pool is only 200 million USDT, there is no need to worry about slippage issues.

Liquidation Mechanism


The liquidation mechanism involves three different data which are debt ratio, liquidation ratio, and risk ratio.1. Liquidation ratio: When the debt ratio of the position reaches the liquidation ratio, the position will be automatically liquidated. The liquidation ratio of each token pair is different due to the different leverage multiples.2. Debt ratio: Calculated in the lending’s token, the ratio of the lending’s value to the value of the position in the current position. [Formula: debt ratio = lending amount/position value (calculated in lending currency)]3. Risk ratio: The ratio of the current debt ratio of the position to the liquidation ratio. When the ratio is 1, that is, when the risk ratio reaches 100%, liquidation will be triggered. [Formula: risk factor = debt ratio/liquidation ratio*100%]

Liquidation rules

1. The liquidation mechanism uses the oracle matrix and DEX double price verification, which means the error needs to be within 5% before liquidation. The oracle matrix will use oracles Chainlink quotation and zkFox oracles quotation. to ensure safety, zkFox will also access more More oracles in the future.2. When the market fluctuates volatile, and the user’s deposit cannot pay the platform fee and the sum of deposit interest (1+N)%, that is, the risk rate reaches 100%, the repayment liquidation will be triggered and the user's order will enter the liquidation list and will waiting for hunters to trigger a liquidation.3. The hunters can choose the corresponding order to trigger the liquidation in the liquidation list. And does not need to help the liquidated user to repay, but needs to trigger the liquidation and obtain aN% of the margin as income, and the remaining (1-a)N % will be invested in the risk margin fund pool to withstand asset losses caused by future uncertainties.4. Two price verifications (in 1 minute), to prevent attackers from profiting by price manipulation in the same block through lightning loans.

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