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Farming Long/Short or "Free Leverage Position"

How to go long or short on an asset and farm with it with the help of Gearbox.

Farming Long: Free Leverage / Hedge

If you want to go long ETH to USDC, you need to open a Credit Account denominated in a stable coin. Then you can use those extra stables you got from leverage and buy more ETH with your Credit Account. The same strategy goes for going long ETH against BTC or some other asset.
  • Go to the Credit Accounts app page.
  • Open a USDC-denominated Credit Account. For example, 100.000 x 5 leverage = 500K USDC.
  • Swap all the USDC from your Credit Account to ETH. Bam, ETH long is open!
  • Now put that ETH into some farm which generates APY, see Leveraged liquid staking.
  • You now have an ETH long that is paying you rewards rate (possibly) in higher numbers than the borrow rate on that USDC that you have to pay. It's a free leveraged trade!
Depending on the interest rates in Gearbox Protocol and interest rates in Yearn or another protocol, you can actually get a self-repaying long or even a net-paying long.

Farming Short: Free Leverage / Hedge

If you want to go short ETH to USD, you need to open a Credit Account denominated in ETH. Then you can sell all the ETH within your Credit Account to USDC. You can use those USDC to leverage farm or do something else then.
  • Go to the Credit Accounts app page.
  • Open an ETH-denominated Credit Account. For example, 50 x 5 leverage = 250 ETH.
  • Swap all the ETH from your Credit Account to USDC. Bam, ETH short is open!
  • Now put that USDC into some farm which, see Leveraged stablecoin farming.
  • You now have an ETH short that is paying you rewards rate (possibly) in higher numbers than the borrow rate on that ETH that you have to pay. It's a free leveraged trade!
Depending on the interest rates in Gearbox Protocol and interest rates in Convex or another protocol, you can actually get a self-repaying long or even a net-paying long.
The same strategy goes for going short WBTC against ETH or some other asset available.