Step 3: Choose borrow ratio

The borrow ratio will determine how you borrow out funds for your leverage part. This is an important setting which will determine your pnl curve and the direction of your price prediction.

The outcome in different borrow ratio scenario

• A higher SOL borrow ratio: If you borrow out more SOL and provide liquidity, this means you want to sell your borrowed SOL in the market and you are short SOL. As a result, a higher SOL borrow ratio means a Solana short LP position.

• A higher USDC borrow ratio: If you borrow out more USDC and provide liquidity, this means you want to buy more SOL with the USDC you borrow in the market and you are longSOL. As a result, a higher USDC borrow ratio means a Solana long LP position.

• A balanced SOL/USDC borrow ratio: A balanced SOL/USDC borrow ratio means your borrowed position won't have any prediction to the market, which means you think the volatility of SOL will be low in the upcoming days, this is the best strategy to earn fees during a market with low volatility.

Example

Let's take SOL/USDC pool as example, and assume the SOL price is 1 SOL = 150 USDC.

If you deposit 1 SOL as collateral and open a 3x leverage, you set the borrow ratio as 50% SOL, 50% USDC, then you will borrow out 1SOL and 150USDC, and your total position is 2SOL and 150USDC.

After determine the collateral, leverage ratio and the borrow ratio, your initial total deposit will be determined.