Boost & Repay
Last updated
Last updated
Boost is a leverage increase option that can increase your exposure to the selected asset by taking on more debt.
More specifically, Boost generates more DAI, swaps those DAI for the used collateral and instantly adds those new funds to your MakerDAO Vault, increasing your leverage and exposure to that asset.
For example, if you have an ETH Vault, Boost will:
Generate selected amount of DAI
Swap those DAI for ETH using one of the integrated liquidity sources
Add the new ETH to your Vault
All three steps are completed within one transaction.
Boost is most often used by those who utilize the MakerDAO protocol as a decentralized option for longing ETH or other supported assets. You would either use Boost when the market dips, to benefit from a potential recovery, or you could use it when you believe the market will continue moving up.
If you're interested in learning more about longing assets with decentralized finance protocols, we recommend reading our How to long or short any asset using DeFi lending protocols post.You can also configure Automation to automatically boost your Vault in case market keeps going up. We wrote about the potential benefits of this in our Automation performance analysis post.
Repay is a deleveraging option that can decrease your debt and exposure to the selected asset by unwinding your position.
More specifically, Repay takes out locked collateral, swaps it for DAI and uses the DAI to instantly pay off part of your debt, decreasing your debt and increasing your collateralization ratio.
For example, if you have an ETH Vault, Repay will:
Take out selected amount of ETH
Swap the ETH for DAI using one of the integrated liquidity sources
Use the newly obtained DAI to pay back part of your debt.
All three steps are completed within one transaction.
Repaying can be extremely useful in case of market drops, when you need to make urgent actions to protect your Vault from liquidation.
However, Repay can also be used as an option to clear your debt when market moves up and you feel it's a good time to close out your leveraged position and take profits.