HOWTO Short on Kujira FIN

HOWTO short – even now! – on @TeamKujira FIN!

First, read my article on HOWTO leverage long on @TeamKujira FIN.

Second: what is shorting, or longing, for that matter?

To sell a position short, at base, is simply to sell an asset.

I have, say, 0.03 $wETH, I sell my 0.03 $wETH now, my portfolio is now short by 0.03 $wETH, right?

Shorts are not mystical, folks. There's nothing to fear.

There are all these expectations and flavorings you can do with your positions, be they long, short, or, idk: 'fun-sized.' So you can complicate anything any way you like, but let's keep things simple and straightforward.

That's the approach I take to investing.

Works for me.

What I do, when I decide I'm going to short an asset with leverage, is:

1. make sure I can live with being liquidated
2. make sure I have a good handle on how the asset behaves in various markets
3. make sure to hedge my short with a long.

ALWAYS, ALWAYS, ALWAYS HEDGE!

Okay, so, for this 🧵let's short $wETH.

• Do I already have a $wETH long in place? YEUP!

• Do I have $wETH to short? NUPE!

So let's borrow $wETH, so we can short it.

You see from PT, my $wETH long position is 55 $USK, so let's borrow 55 $USK of $wETH.

How much $USK do you need to put up as collateral?

If your answer is "55 $USK," your answer is wrong.

Safe LTV ('loan to value') is at 30%, so borrowing 55 $USK of $wETH requires 200 $USK.

Okay, $wETH borrowed.

Now, to create a short, I sell it.

When I sell my $wETH, how do I want to sell it? Do I want to sell it at the highest possible prices or at the lowest possible price?

Answer this before continuing, please, because this is important.

The answer is you want to sell at the highest possible price:

Buy low; sell high

for shorts translates into: Sell high; buy low.

For a short, you're anticipating, when you sell now, that you'll buy the asset back later at a lower price.

You want to sell now at the highest price.

When that order hits, boom! congratulations! You've just shorted $wETH (at 1.0x leverage), at some later time, you buy back the $wETH at a lower price and you now have more $wETH, see?

Just record what price you sold at, so you know what's a good buy price-point.

BUT! WHEN the $wETH DOES SELL!

You can do some neat things to LEVERAGE your short.

We'll talk about that after the sale, ... and, after my morning and afternoon meetings.

... [some time later] ...

The borrowed $wETH is sold: some as $USK, some as $axlUSDC. 

Let's swap everything to $USK and press on, then!

• 2023-05-11 SOLD 0.033 $wETH for 59.84 $USK at 1814.77-per.

So now I have ~60 $USK from the $wETH I sold.

Two paths: I could buy-back the $wETH, as I borrowed it at 55 $USK, close the loan and profit with the $wETH remaining.

Or!

So, I supply the 59.84 $USK, then borrow what $wETH I can from that, which turns out to be 0.01 $wETH.

Then I straightaway put that borrowed $wETH up for sale on @TeamKujira FIN.

When that order fills, I'll have sold more $wETH (at a recomputed price-point), but here's the thing: it's BORROWED $wETH (from BORROWED $wETH!!!) that I've sold!

When the sell order fills, I'll have LEVERAGED my short position by the amount I've just borrowed (FROM my borrow)!

Okay! The $wETH sell order popped, giving me a new average cost:

2023-05-10 entry: 0.033 $wETH at 55 $USK

2023-05-11: 0.0429 $wETH

average cost: 1,809.05-per

leverage: 1.411x

buy-point: 1,644.59 at 77.61 $USK

So, I've got a $wETH 1.4xSHORT on @TeamKujira FIN.

YAY! 🎉🎉🎉

What will the leverage be if I loop this once more?

Let's give that a go:

• I borrow 0.007 $wETH from 17.75 $USK collateral

• I put that $wETH up for sale.

BOOM! 💥

The $wETH sell-order hit, 

bringing our leveraged SHORT position to ... [calculating] ...

Leverage: 1.637x

at: $1,803.87-per

BUY-point: $1,639.88 for 90.01 $USK

Consequence

Using this approach, you can short any position you LONG, e.g.: $ATOM, $LUNA, $wBNB, $DOT, ...

But, here's the thing:

You can use this approach to take a leveraged short position on ANY asset you can borrow.

What does this mean?

Do you want to short $KUJI?

You can now short $KUJI.

Do you want to short $USK or $axlUSDC?

You can short these stables.

Short $wBTC? SURE!

ANY asset you borrow on @TeamKujira Ghost, you can create a leveraged short position with this approach.

Of course, the usual caveats contra leverage and shorting apply, but: you're the DeFi Kings and Queens here now.

@TeamKujira has placed into your hands these powerful tools.

Postscript

P.S.:

Remember how I started this HOWTO?

"Shorts are, at base, selling an asset."

There's no law requiring you borrow the asset first to sell it.

For example, I happen to have a TON of $LUNA.

Maybe $LUNA might go down more?

So, I short $LUNA, starting with the $LUNA I have.