# Leverage Trading

Kona Lend's leverage trading lets you open amplified long, short, and yield loop positions in a single transaction using flash loan loops. All positions are non-custodial — funds are held in the Kona Lend pool under your wallet address. The looper contract never holds assets between transactions.

***

### How It Works

Under the hood, leverage is achieved through **flash loan loops** on the Kona Lend pool:

1. You deposit collateral (e.g. 100 PENGU).
2. The KonaLooper contract takes a flash loan for the additional capital needed.
3. It supplies the total collateral to Kona Lend and borrows against it in one atomic transaction.
4. The flash loan is repaid from the borrow proceeds.

The result: you end up with a leveraged position (more collateral supplied, debt owed) — all in a single click.

***

### Position Types

#### Long

**Profit when the asset price goes up.**

* You deposit the volatile asset (e.g. PENGU or WETH).
* The looper supplies it as collateral, borrows a stablecoin (USDC), swaps it for more of the volatile asset, and re-supplies.
* Your position gains value when the collateral appreciates vs. the debt.

| Market     | Collateral | Debt | Max Leverage |
| ---------- | ---------- | ---- | ------------ |
| Long PENGU | PENGU      | USDC | Up to 1.8x   |
| Long WETH  | WETH       | USDC | Up to 4.0x   |

#### Short

**Profit when the asset price goes down.**

* You deposit a stablecoin (USDC).
* The looper supplies it as collateral, borrows the volatile asset (e.g. WETH), swaps it for more USDC, and re-supplies.
* Your position gains value when the borrowed asset drops in price vs. your stablecoin collateral.

| Market      | Collateral | Debt  | Max Leverage |
| ----------- | ---------- | ----- | ------------ |
| Short PENGU | USDC       | PENGU | Up to 3.5x   |
| Short WETH  | USDC       | WETH  | Up to 3.5x   |

#### Yield Loop

**Earn amplified lending yield with no directional price risk.**

* You deposit an asset (e.g. PENGU) and the looper loops it: supply PENGU, borrow PENGU, supply again.
* Since collateral and debt are the same token, there is **no liquidation price** from oracle moves — only interest rate risk.
* You earn supply APY on the full leveraged amount and pay borrow APY on the debt.

| Market      | Asset | Max Leverage |
| ----------- | ----- | ------------ |
| PENGU Yield | PENGU | Up to 1.8x   |
| USDC Yield  | USDC  | Up to 3.9x   |
| USDT Yield  | USDT  | Up to 3.9x   |
| WETH Yield  | WETH  | Up to 4.0x   |

**Net APY formula:**

```
Net APY = (Supply APY × Leverage) − (Borrow APY × (Leverage − 1))
```

For example, at 3x leverage with 5% supply APY and 3% borrow APY:

```
Net APY = (5% × 3) − (3% × 2) = 15% − 6% = 9%
```

> Yield loop positions also earn **Kona Points** on both the supply and borrow side, which are multiplied by your leverage.

***

### Opening a Position

1. Navigate to **Lending → Leverage** in the sidebar.
2. Select your asset and strategy (Yield Loop, Long, or Short) using the pair selector or the trade builder tabs.
3. Enter the amount you want to deposit.
4. Choose your leverage multiplier using the slider or quick-select buttons.
5. Review the quote: position size, estimated debt, health factor, liquidation price, net APY, and flash loan fee.
6. Click **Review** to see the full confirmation modal with all details.
7. Confirm the transaction in your wallet. The looper handles all approvals, flash loans, and swaps atomically.

#### What you'll see in the review modal

* **Margin** — your initial deposit (in tokens and USD).
* **Leverage** — the multiplier you selected.
* **Position Size** — total collateral after looping (in tokens and USD).
* **Estimated Debt** — how much you'll owe (in tokens and USD).
* **Liquidation Price** — the asset price at which your position would be liquidated (N/A for yield loops).
* **Health Factor** — a measure of position safety. Below 1.0 triggers liquidation.
* **Net APY / Total APY** — your expected annualized return including Kona Points rewards.
* **Flash Loan Fee** — a small one-time fee (0.09%) charged by the pool on the flash-loaned amount.
* **Slippage** — maximum acceptable slippage for any swaps involved.

***

### Managing Open Positions

#### Position Table

Your open positions appear below the trade builder with real-time data:

* **Pair** — asset, direction badge (LONG / SHORT / YIELD), and time since opened.
* **Size** — total collateral supplied (tokens + USD).
* **Entry / Now** — the oracle price when you opened vs. current mark price.
* **Leverage** — the leverage you selected when opening.
* **Liq. Price** — price at which liquidation occurs, with "% away" distance indicator. Same-asset yield loops show N/A.
* **PnL** — dollar profit/loss and percentage. Toggle to APY view to see net yield instead.
* **Health** — per-position health factor with color coding (green > 1.5, yellow > 1.2, red < 1.2).

The summary bar at the top shows aggregate stats:

* **Net Value** — total equity across all positions.
* **Collateral** — total collateral supplied.
* **Global Leverage** — overall portfolio leverage (total collateral / net value).
* **Global HF** — your account-wide health factor from the Kona Lend pool (affects all positions).

#### Reducing Leverage (Adjust)

Click **Adjust** on any position to partially deleverage:

1. Drag the slider left to choose a lower target leverage.
2. The modal shows estimated changes: new collateral, debt, health factor, and how much debt will be repaid.
3. Click **Reduce** to execute. The looper withdraws collateral, repays debt, and adjusts your position in one transaction.

> You can only reduce leverage through the Adjust modal. To increase leverage, open a new position with additional deposit.

#### Closing a Position

Click **Close** to fully unwind a position:

* The looper redeems all collateral, repays all debt, and returns the remaining equity to your wallet.
* For cross-asset positions (long/short), a swap occurs to convert collateral back to the repayment token.

***

### Liquidation

Liquidation happens when your **Health Factor drops below 1.0**. This means the value of your collateral (weighted by the liquidation threshold) no longer covers your debt.

#### What affects your Health Factor

| Factor                          | Effect                         |
| ------------------------------- | ------------------------------ |
| Collateral price drops (longs)  | Health factor decreases        |
| Debt asset price rises (shorts) | Health factor decreases        |
| Accrued borrow interest         | Slowly decreases health factor |
| Higher leverage                 | Lower starting health factor   |

#### Yield loops and liquidation

Yield loops (same-asset) have **no liquidation price** because the collateral and debt are the same token — price movements affect both sides equally. However, if the **borrow rate exceeds the supply rate** for an extended period, accrued interest can erode your health factor over time.

#### Shared account health

If you have multiple positions or other Kona Lend supply/borrow positions on the same wallet, they **share a single health factor** at the Kona Lend pool level. A liquidation on any position can affect all others. For safer leverage trading, consider using a dedicated wallet.

***

### Fees

| Fee                | Amount                              | When                                    |
| ------------------ | ----------------------------------- | --------------------------------------- |
| Flash loan premium | 0.09% of flash-loaned amount        | One-time, at open                       |
| Borrow interest    | Variable (market-driven)            | Ongoing, accrues over time              |
| Swap slippage      | Up to your tolerance (default 1.5%) | At open/close for cross-asset positions |
| Protocol fee       | 40-60 bps (lower for farm loops)    | One-time, at open                       |

***

### Paper Trading

New to leverage? Switch to **Paper Mode** using the toggle in the top-right corner.

* Start with **$5,000 in virtual funds**.
* Open and close positions using **real-time market data** and oracle prices.
* Track your PnL, open positions, and trade count.
* Paper positions are saved locally and persist across sessions.
* Switch to **Real Mode** anytime — paper positions stay separate.

Paper trading is a risk-free way to learn how leverage, liquidation, and yield loops work before committing real assets.

***

### Contracts

| Contract                    | Address                                      | Network          |
| --------------------------- | -------------------------------------------- | ---------------- |
| KonaLooper (Proxy)          | `0x09A4518945C9cD484B5eac3FACf4A5B0bdd3A5bc` | Abstract Mainnet |
| KonaLooper (Implementation) | `0x39fb6d7B5566d2F844863F2AaE1C7C74896e0B31` | Abstract Mainnet |
| Kona Swap Router            | `0x441E0627Db5173Da098De86b734d136b27925250` | Abstract Mainnet |

The KonaLooper is a non-custodial helper contract. It executes flash loan loops on behalf of the user but **never holds funds** — all collateral and debt positions are held directly in the Kona Lend pool under the user's address.

***

### FAQ

**Can I get liquidated on a yield loop?** Not from price movements. Since collateral and debt are the same token, oracle price changes don't affect your health factor. However, if borrow rates stay significantly above supply rates for a long time, accrued interest can gradually reduce your health factor.

**Why does my health factor show the same value for all positions?** The "Global HF" in the summary bar is your account-wide health factor from the Kona Lend pool — it covers all positions together. Each position row shows its own per-position health factor based on that position's collateral and debt.

**Can I increase leverage on an existing position?** Not directly. To get more leverage, open a new position with additional deposit. The Adjust modal only supports reducing leverage.

**What happens if I have positions on Kona Lend Markets and Leverage?** They share the same Kona Lend pool account. Your global health factor reflects all supply and borrow activity. A warning banner will appear if external positions are detected.

**What are Kona Points?** Kona Points are reward emissions distributed to Kona Lend suppliers and borrowers. Leveraged positions earn points on both sides — supply points on your total collateral and borrow points on your debt — effectively multiplied by your leverage.

**What's the flash loan fee?** 0.09% of the flash-loaned amount, charged once when opening the position. This is the standard Kona Lend flash loan premium.


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