ZLP hedging

zkEra aspires to help our users by supplying a dollar-neutral strategy. In order to do so, our service offers to hedge open positions and deposits in a liquidity pool on the Zksync Era network.

The user may use the page “Buy ZLP” to access the feature. zkEra.fi assists users in opening hedge positions using the project’s interface.

Hedging – creating short positions against tokens, whose price decline will respectfully lower the price of ZLP. In that case, with a decrease in the price of ZLP, the user compensates for the loss with the earnings from short positions.

The users are accessed to two ways of creating the hedge:

1. Hedging existing ZPL position The system works out the sum of short positions and assists the user in their creation, in order not to let the price of total assets go down: ZLP + opening a position. Currently, the system presumes the 20% usage of credit in ZLP for hedging. As an example: The user has access to 15,000 ZLP The price of ZLP is $1 In order to create a short position, the algorithm requests to use 20% of owned ZLP credit - $3,000. According to the token size in the ZLP pool, zkEra determines the size of required hedge positions and accommodates the user in the position opening, which will preserve the assets in dollar equivalence. The user is required to select a currency, which will be operated in position opening and then follow further platform directives.

2. Deposit hedging Whether the user desires to purchase ZLP, zkEra invites to hedge the assets, which have been used as a deposit at the ZLP pool. zkEra offers our users to employ 80% deposit credit for buying ZLP tokens and the remaining 20% engage in hedging. As an example: The user exploits $1000 in ETH to deposit zkEra works out the proportion change of the ZLP pool following the deposited $800 in ETH, determines the required hedge positions and accommodates the user in the position opening, which will preserve the assets in dollars accordingly. The remaining $200 in ETH will be operated in opening short positions, which will preserve the assets in dollars accordingly.

Important! The system offers hedging assistance if the user does not own any open short positions. As open positions are exposed to elimination, our team recommends constantly reviewing them to avoid the elimination and loss of collateralized assets completely.

The given method will be constantly developed and deliver users further supplementary features, providing the strategy of neutral positions in relation to the dollar.