Use-case

The three main use-cases for collateral switch are:

• Avoiding price dips of your collateral by moving it into a stablecoin, and then moving back into the original collateral once price recovers.

• Capitalizing on what you think are price peaks by moving collateral into a stablecoin, waiting for a price dip, and then moving back into the original collateral asset.

• Capitalizing on increased supply APYs on other collateral assets, or if your supplied collateral's supply APY dips .

Let's use an example where we have an Aave position with:

• 21.93 ETH collateral

• 43,277 DAI debt

If ETH's price starts crashing from the current $3,836.91 to $3,600 - we might want to switch it to a stablecoin to avoid continued price decreases.

So, we'll navigate to the Aave dashboard in this case, and navigate to the "Shift" tab:

It'll open the Collateral Switch tab by default, and from there, click "Open Collateral Switcher":

You can input any amount of collateral to switch - but since we want to park our ETH in a stablecoin and avoid further price dips, we'll input the whole amount and choose USDC as the new collateral.

We'll also be able to set the slippage limit for the transaction, and get a preview of the what the new Safety Ratio, Net APY and Collateral balance will look like.

If everything checks out, just click "Switch", and sign the transaction:

And just like that, we have a stablecoin position - so we can now wait for the full dip of ETHs price, and re-enter at what we think is the price bottom by using Collateral Switch once again.

The same principal applies if we think ETH's price reached the local top - we would move into stablecoins with Collateral Switch, and then back into ETH once the price falls down.

Borrow APYs can be volatile at times - meaning users can face extended period where a certain borrow asset has a considerably higher Borrow APY than a different one.

So, to avoid paying a higher premium on one debt asset instead of another, users can switch their debt asset to a lower Borrow APY one through DeFi Saver.

The first step is navigating to the Aave dashboard and opening the "Shift" tab:

From there, click on "Debt Swtich", and then the "Open Debt Switcher" button.

This will open a pop-up window:

You can opt to only switch part of your debt - but for this example, let's swith the whole amount.

Before executing the transaction - you can also set the slippage limit and also see how your position metrics change after the switch.

In this case, by moving into USDC, our Net APY increases from 1.63% to 2.07% - as DAI currently has a 5.69% Borrow APY, while USDC's is 5.28%

If everything looks good, simply click "Switch", sign the transaction, and you'll be good to go.

With this tool, you can easily go from a long position to a short one and vice-versa.

Say we have a long ETH position where we leveraged at 3x and have:

• 29.94 ETH collateral

• 77,227 USDC debt

As long as ETH's price keeps going up, we're in profit.

However, if ETH's price starts falling, we're in danger of being at a loss if it disp below our entry point.

If you expect ETH's price to keep falling after a local top - you can capitalize on this and move from your original long position into a short one.

Simply visit the (in this case) Aave dashboard, and open the "Shift" tab:

Then, open "Position Flip", and then click "Open Position Flip". This will open a new pop-up window:

Everything will already be set up to flip your position - and you'll also have the option to set the slippage limit, along with a preview of what your position's metrics will look like after the flip.

When you're ready, click "Flip", sign the transaction, and you'll move from a long position to a short one in a single transaction.

Once you think ETH's price has reached its local bottom, simply re-use Position Flip to move back into a long position.