Frequently Asked Questions
1. What is Levrex Finance?
Levrex is a leveraged yield farming protocol on the Katana Ecosystem that allows users to amplify their DeFi strategies using up to 5× leverage and earn optimized rewards across top dApps.
2. What is LKAT?
LKAT is a 1:1 liquid wrapper for locked KAT. It allows users to use their KAT rewards immediately in DeFi without waiting for the unlock period.
3. What assets can I lend or use as collateral?
You can lend AUSD and use KAT or LKAT as collateral for leveraged yield farming.
4. What is the difference between APY and APR?
APR (Annual Percentage Rate): Represents the simple interest rate applied to an investment over a year, without compounding.
APY (Annual Percentage Yield): Includes compound interest, meaning earnings are reinvested, leading to higher returns over time.
5. What is Utilization Rate, and how does it affect APY?
Utilization Rate is the percentage of the total deposited AUSD used for leveraged positions:
Formula: Borrowed AUSD / Deposited AUSD
Impact on APY:
Higher utilization → Increases APY for lenders (more demand for borrowing)
Lower utilization → Decreases APY for lenders (less demand for borrowing)
6. How is the APY for Lending calculated?
The APY for lending is determined based on supply and demand dynamics within the platform. More detailed calculations may be provided soon.
7. How is the APY for Farming calculated?
The APR from the base farm is converted into APY, factoring in compound interest. (Levrex compounds every 4 hours.)
Leveraged APY = 5x the APR (since Levrex allows up to 5x leverage). Example:
If the APR for YearnFi’s ETH/USDC is 100%, the APY would be 171.46%.
At 5x leverage, the APR becomes 500%, which converts to an APY of 14,246%.
8. Can lent AUSD be withdrawn immediately?
Lent AUSD cannot be withdrawn immediately if all deposited AUSD is being used for leveraged farming positions.
You can withdraw your funds when:
Users close their leveraged positions.
More users deposit AUSD into the bank.
If utilization is above 90%, lenders receive an APY of over 100% as an incentive for providing liquidity.
Soon, a lxAUSD/AUSD LP pool will be introduced, allowing users to withdraw by trading on the LP pool.
9. If I close my farm position (profit/loss), can I withdraw my funds immediately?
Yes, you can withdraw your funds at any time.
10. What is lxAUSD, and how is the reward calculated?
lxAUSD is a receipt token for lending AUSD on Levrex.
It is an interest-bearing token that grows in value over time according to the APY provided by lending.
11. How does liquidation work, and how can it be avoided?
Liquidation ensures that bad debt does not accumulate.
If a position value falls below 110% of the borrowed amount, liquidation occurs.
Example:
Collateral: 5 AUSD
Borrowed Amount: 20 AUSD
Total LP Position: 25 AUSD (converted into ETH/AUSD LP)
Liquidation happens if the LP value drops below 5.5 AUSD.
How to avoid liquidation:
Monitor your Health Factor (should be above 1.05).
Add more collateral to strengthen your position.
12. What is the optimal condition for farming?
High APYs for farming
Low borrowing costs (low APY for borrowing AUSD)
Low utilization rate
13. What is the optimal condition for lending?
High APYs on the lending page
14. Why can't I open a new position in Farms?
If the amount you want to borrow is unavailable in the bank, you cannot create a new position. This will be indicated on the dApp interface.
If you still have issues, create a support ticket on Discord.
15. What are the risks of lending?
Smart contract risk: Potential for hacks, despite ongoing security audits.
Liquidity risk: If the utilization rate is close to 100%, withdrawing AUSD may be difficult. (A lxAUSD/AUSD LP pool will soon be introduced to help with withdrawals.)
16. What are the risks of farming?
Impermanent Loss: If price ratios change significantly, your LP value may drop.
Leveraged Impermanent Loss: When using leverage, losses can be amplified.
Liquidation Risk: If the LP position falls below 110% of collateral, liquidation occurs.
17. What is a Health Factor, and how do I use it to manage my position?
The Health Factor measures collateral vs. position size.
If the Health Factor drops below 1, liquidation occurs.
We recommend keeping it above 1.05 by depositing more collateral when needed.
18. Can I open a Farm position with zero liquidation risk?
Yes! Set leverage to 1x, meaning only your collateral is used. No liquidation risk exists if no funds are borrowed.
19. What assets are currently supported for lending?
AUSD and ETH
20. Why does the APY show as positive, but I'm losing money on the Farm?
APY measures yield potential but does not account for position value changes.
If the LP value drops due to impermanent loss, your total position size may decrease, even with a high APY.
21. How does governance work on Levrex Finance?
Levrex uses a token-based governance system where users lock LVRX tokens to receive xLVRX.
xLVRX holders can propose and vote on protocol changes, including fee structures, leverage limits, and treasury allocations.
22. What’s the difference between LVRX and xLVRX?
LVRX is the liquid governance token, while xLVRX represents locked LVRX with governance power.
Locking LVRX for 2 years gives a 1:1 xLVRX ratio; a 1-year lock gives 0.5:1. Only xLVRX is used for voting and fee distribution.
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