Introducing the Accelerated Leverage Engine
This week we unveiled ALE - the Accelerated Leverage Engine - on FiRM. ALE provides borrowers with a way to instantly multiply their borrowing against a single collateral position up to 8 times their original loan. ALE is a feature on FiRM that users have requested repeatedly and with FiRM close to its one year anniversary, we are ready to begin adding "after-burner" type features to prepare for more expansive DOLA lending in 2024.
Why ALE Is Different
What sets ALE apart from legacy borrow multipliers is the ability to borrow at fixed rates over long periods of time. Other borrow multipliers that rely on variable interest rates force borrowers to be more cautious in their use of a borrow multiplier, as highly leveraged positions are more sensitive to both volatility in the underlying collateral but also in additional debt added as a result of interest rate volatility. In addition, institutions, hedge funds, and others seeking certainty around their financing costs can at best only forecast those costs with variable rates, while fixed rates on FiRM provide certainty, in addition to the optionality of speculating on the price of DBR or locking interest rates in anticipation of future rate increases.
Cost and Time Savings
Feedback we consistently hear from users – including some of the larger wallets using FiRM – is that reducing the “hassle factor” is surprisingly high on their list of wants for FiRM. The beauty of ALE - true of most borrow multipliers, too - also lies in its ability to compress multiple transactions into a seamless, no-hassle process on FiRM, which significantly minimizes gas costs. This includes ALE’s integration with DBR auto-buy functionality, which adds further convenience by enabling users to consolidate their DBR purchases within the same ALE transaction, further enhancing the user experience
You can try ALE live now on FiRM. ALE works for those levering up, but also for those seeking to de-leverage in a single transaction:
Who Should Use ALE
All FiRM users should do their own research before borrowing, but ALE is meant for experienced “power” users who understand the inherent risks of accelerated leverage. If you are unsure about using ALE or have questions, please stand back or please visit us in our Discord where operators are standing by to take your questions.
ALE is a important milestone not just for the DAO but more broadly for DeFi, where the potential for fixed rate lending has barely begun to be tapped. ALE provides a powerful tool for tapping both the power of accelerated borrowing and long-term fixed rate borrowing. A dynamite combination. As ALE is applied not just to volatile collateral but also to yield-bearing stablecoin collateral, we see a new wave of DeFi composability in 2024 and as alwyas, we look forward to your feedback!