Skip to main content
In today’s crypto landscape, if an investor wants to increase their exposure to an asset (say, get 2x the gains of ETH), they typically have to rely on traditional leveraged strategies. These include margin trading on exchanges, borrowing additional funds against collateral, or buying derivative products like futures or options. Each of these approaches comes with significant challenges and pain points.

​
High Capital Requirements

Traditional leverage often requires over-collateralization. For example, borrowing to double your ETH holdings might require you to lock nearly an equal value of ETH or stablecoins as collateral. This ties up a lot of capital, making the strategy inefficient.

​
Liquidation Risk

If the market moves against a leveraged position, the user faces the risk of liquidation. In a margin trade or loan, a price drop of the underlying asset can trigger a forced sale of collateral at a loss, potentially wiping out the user’s funds. The constant threat of margin calls makes leveraged investing stressful and fragile.

​
Complex User Experience

Managing leveraged positions can be complex for average users. One must monitor collateral ratios, maintain debt positions, and understand complex instruments. Mistakes or inattention can be very costly. This complexity creates a barrier to entry for many who might otherwise benefit from moderate leverage.

​
Inflexibility of Derivatives

Products like traditional options or leveraged tokens have fixed terms and often expire or decay in value. They might not provide the flexibility for users to enter and exit at will without penalties or slippage. Perpetual futures allow continuous positions but still carry liquidation and require active collateral management. These challenges mean that many crypto investors either avoid using leverage altogether or take on outsized risks if they do. There is a clear need for a solution that provides the upside benefits of leverage without the typical downsides – one that is capital-efficient, user-friendly, and eliminates the risk of sudden liquidation. This is the gap that Lora Finance aims to fill.