As of October 2023, stATOM is now available to trade on Levana Protocol! Follow this tutorial for a comprehensive overview of what Levana Protocol is, what sets this project apart from other perpetuals protocols, and how stATOM holders can deploy their assets using this platform.
Perpetuals
Often referred to as "perps," have become a fundamental aspect of Defi trading. They provide traders with the ability to leverage their exposure, take long or short positions, and seek potential profits. The drawback is that trading on conventional platforms involves complexities such as the risk of liquidation, ongoing borrowing fees, and the need to navigate intricate order books and virtual automated market makers (vAMMs).
Enter Levana: A protocol for perpetual swaps (leveraged trading contracts) aiming to manage risk and provide benefits to both traders and liquidity providers.
Levana Protocol stands out primarily through its introduction of segregated pools, which means that Levana can spin up a new market and it doesn’t change the risk or reward for any other liquidity pools. Levana allows users to launch a wide variety of assets, including synthetic assets such as ETFs, commodities, forex, and cryptocurrencies. They offer high leverage options, such as 100x for foreign exchange, providing traders with unparalleled flexibility. Levana also offers single-sided liquidity pools, effectively eliminating the concept of impermanent loss. Users can be assured that there is no risk of insolvency nor a requirement for on-chain sequencing or order books, but instead have the ability to execute instant open and close positions without the need for maker-taker matches.
The integration between Stride and Levana presents a significant opportunity for traders: most significantly, users are now able to access to real yield opportunities for stATOM, a unique offering in the perpetuals trading landscape. Follow along with this tutorial to see how to use this application to your own benefit.
Step 1: Access Levana Vaults
- Visit the Levana platform and connect your wallet (ex. Keplr), to access your assets. You can access the App at https://trade.levana.finance/osmosis/trade/.
Note: Levana Protocol is supported in limited regions due to geoblocking - proceed accordingly.
Step 2: Acquire stATOM Tokens
- Click on the "Bridge Funds" button on the right column. Bridging funds just refers to the process of transferring assets from one blockchain or network to another to make them usable on the destination network.
- Select the source of your tokens - either stATOM that you may have in your wallet stored on a different chain, or a different token that you have a supply of that you can swap with (e.g., Osmosis).
- Connect your wallet (Keplr). Enter the number of tokens that you want to move from the original chain to get stATOM with (or the token you wish to swap for stATOM), and the destination chain (Osmosis).
- Review the estimated transaction details, including slippage. You can view this by selecting the Settings gear icon in the top right corner.
Slippage is the difference between the expected and actual execution prices of a trade, often caused by market volatility or order book conditions. Low slippage is preferred by traders as it minimizes unexpected price discrepancies during trade execution.
- Confirm the transaction in your wallet, and your stATOM tokens will be on their way!
Step 3: Open a Position
- Now that you have stATOM in your wallet, select the amount you want to use for your position. In the app interface, you use the toggle that denominates this in stATOM or USD for simplicity.
- Choose your position type:
- Long: A long position in trading is a strategy where an investor or trader buys an asset with the expectation that its price will increase over time. They aim to profit from the appreciation of the asset's value and typically plan to sell it at a higher price in the future. Set this if you believe the price of ATOM and stATOM will go up.
- Short: A short position in trading is a strategy where an investor or trader borrows and sells an asset that they do not own, with the anticipation that the asset's price will decrease. They aim to repurchase the asset at a lower price in the future to profit from the price decline and return it to the lender. Set this if you anticipate a price decrease.
- Decide if you want to use a limit order or a market order:
- A limit order opens your position when stATOM reaches a specific price.
- A market order opens your position immediately at the current market price.
- For simplicity, this tutorial uses a market order.
- Select your desired leverage level, e.g., 25x. When choosing your leverage level in trading, you should consider your risk tolerance, trading experience, and market conditions. Higher leverage can amplify both gains and losses, so it's crucial to assess how much risk you are comfortable with and ensure you have a solid understanding of leverage's impact on your trades. Additionally, market conditions and volatility should be taken into account, as more volatile markets may require lower leverage to manage risk effectively.
- Set a take profit and stop loss to manage your risk:
- Take Profit: The price at which you want to automatically sell your position when it reaches a certain price point such that you are profiting.
- For example, if you set the Take Profit price at 8 USD, then when stATOM hits that price, your position will be automatically sold.
- Stop Loss: The price at which you want to automatically close your position if the market moves against you and you want to limit your potential losses.
- For example, if your Stop Loss price is set to 7.65 USD, if the price of stATOM goes down to that number, then your position will be automatically closed at this price.
- Review the preview of your profit and loss based on your settings. If you're satisfied with the details, you can go forward with opening your position. Confirm the transaction with your Keplr wallet.
Step 4: Monitor, Adjust, or Close Your Position
- Your order will start in the negative initially due to fees. You can click on the position to see a summary of your estimated profits and losses.
- Keep an eye on your position in the "Open Positions" section on the platform.
- To update your position parameters, click on your open position in the "Open Positions" table, and a popup titled “Update Position” will appear where you can make changes.
Note: These fees are subtracted from your position's value, which temporarily puts your position in a loss, even if the market price hasn't moved significantly. In other words, the fees associated with opening the position are factored into the position's initial value, and you will need the market to move in your favor to offset these fees and start showing a profit. This is a common aspect of trading and is important to consider when managing your positions and calculating potential gains or losses.
Note: The funding rate will be displayed at the top left of the page of the position you are viewing. The funding rate is critical to keep track of: whenever there is imbalance in the market, then there is an opportunity for the popular side to pay the not-popular side.
If you click on the little question mark next to “Funding Rate (APR)” on the left side of the screen, you’ll see a pop-up window interpreting what this means for those going long versus those going short with their positions:
- If you want to close your position, you can do so individually by clicking the "X" button on the position, or you can use the "Close All Positions" button.
Tracking Your History:
After closing a position, you can view it in the "History" section above the page. This provides a record of your past trades and earnings history.
You can view your profits and losses from your trading as well as from your earning. If you click on a position, you can view:
- how it changed over time
- the fees you paid over time
- the ability to export the list, which you can utilize during tax filing
That's it! With this tutorial, you'll have successfully added stATOM liquidity to Levana Vaults and opened a position. Please remember that investing in leveraged positions carries risks, and it's essential to understand the potential for both gains and losses. Always practice due diligence and ensure you are comfortable with your chosen strategy.
Please be aware that this guide is for informational purposes, and you should consult the platform's documentation and support for the most up-to-date and accurate instructions.