Leverage
Using borrowed capital to amplify potential returns (and losses) on an investment position.
In-Depth Explanation
2x leverage means $100 controls $200 of exposure—gains and losses are doubled. DeFi enables leverage through lending (borrow against collateral to buy more), perps, and leveraged tokens. Leverage amplifies returns but dramatically increases liquidation risk. In volatile crypto markets, high leverage frequently leads to rapid liquidations.
Related Terms
Liquidation
Forced closure of an undercollateralized position, typically with a penalty to the borrower.
Collateral
Assets deposited as security for a loan, which can be seized if the borrower fails to repay.
Perpetual Futures
PerpsFutures contracts with no expiration date that track an underlying asset's price through a funding rate mechanism.
More in Yield
View all →Mercenary Capital
Capital that moves between protocols purely to chase the highest incentives, with no loyalty or long-term commitment.
Annual Percentage Yield
APYThe annualized return on an investment accounting for compound interest.
Annual Percentage Rate
APRThe annualized return on an investment without accounting for compounding.
Real Yield
Yield derived from actual protocol revenue and economic activity, not token emissions or inflation.