Use-case
DeFi Saver's Loan Shifter tool gives you the freedom and flexibility to move your positions from protocol to protocol.
The shift is handled in a single transaction, so your loan can be shifted without needing to unwind or repay it manually.
In turn, this allows users to:
Capitalize on better APYs provided on other protocols
Reduce borrowing costs by switching to protocols with lower fees or more favorable collateral requirements
React to market conditions by switching their collateral or debt assets
Access new features that a different or newly integrated protocol offers
Let's look at an example where a user would like to use Loan Shifter to target better APY:
How to utilize Loan Shifter
Say we have an active position on Aave V3 with:
40 ETH in collateral ($63,762)
$30.000 USDT in debt
The current Net APY for that position is +0.23% - We know this since this metric is displayed on our position, but also, we can navigate to the "Market" section of Aave V3 and look at:
ETH's Supply APY (2.02%)
USDT's Borrow APY (4.04%)
We then navigate to Spark's dashboard, and scroll down to the "Market" section:
We notice that:
ETH's Supply APY is 1.98%
USDT's Borrow APY is 2.85%
So, we conclude that, if we had the exact same position, but on Aave V3 - We'd have a Net APY of +1.18%
But instead of:
Closing our Aave V3 position
Paying the fees associated with that
Opening the same position on Spark
Paying the fees associated with that
We decide to use Loan Shifter:
Open up Loan Shifter from the sidebar:
We select our current position on Aave V3 Core, and choose that we want to move it to Spark:
Underneath the inputs, we can see the before and after calculations for our position. We additionally conclude that our Safety Ratio will increase and that we'll have a bit more Borrow Power.
We decide that this works for us, and click "Shift"
Our position has now been moved, with the new APY on display:
Loan Shifter can also be used to switch collateral or debt assets to target those with a better supply/borrow APY - or even if you'd just like to temporarily remove exposure to the current collateral asset by moving into a position with different collateral.
Collateral Swaps
On the main dashboard of Loan Shifter, you can simply choose what asset you'd like to shift your collateral to:
Seeing as there's a swap occurring within the loan shift, factors like Trade Size Impact and slippage play a role. You can learn more about these in the Fees article.
Additionally, there is a 0.25% service fee as the swap is happening between two volatile assets. For stablecoin pairs, the fee is 0.01%
In order to execute certain swaps, a flash loan is also utilized - and the fee for that will be written on the dashboard.
Debt Swaps
On the main dashboard of Loan Shifter, you can simply choose what asset you'd like to shift your debt to:
Seeing as there's a swap occurring within the loan shift, factors like Trade Size Impact and slippage play a role. You can learn more about these in the Fees article.
Additionally, there is a 0.25% service fee as the swap is happening between two volatile assets. For stablecoin pairs, the fee is 0.01% In order to execute certain swaps, a flash loan is also utilized - and the fee for that will be written on the dashboard.
Once the Loan Shift is successful, the confirmation pop-up might seem confusing as it will show that the new debt asset was sold for the original debt asset. For example, if you're switching from DAI to USDC, the confirmation pop-up will show the following:
While this might seem incorrect - since you're moving from DAI to USDC, it's actually correct if we consider how the debt shift works:
The new debt asset is flash loaned (USDC)
It's sold off for the original debt asset in order to repay the original debt (DAI)
The freed up collateral is now moved into the new position
The new debt asset is borrowed and used to pay back the flash loan (USDC)
As such, the only swap happening in the transaction is selling the new, flash loaned debt asset for the original debt asset.
Last updated