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.