Good Entry’s main mission is to create innovative products that protect users while they are trading or yield generating. This guide is all you need to fully understand how Good Entry’s products work. This guide is divided into different levels of concepts and quests to help you have fun while understanding Good Entry’s products. The more concepts you master, the more good entries you will make.
When you open a position on protected perps, you are borrowing the tokenized Uniswap v3 position. Therefore, you can only be liquidated based on the borrow fees to maintain your position instead of being liquidated by price movements of the underlying asset. This also caps your max loss to the activation price that you have selected regardless if you long or short the asset. Your max gains are not capped and can go to the moon 🙊
Isolated markets
Each tradeable asset on Good Entry is its own isolated market. For example, the ETH/USDC market is isolated from the GMX/USDC market. This is because each asset’s liquidity is tied to its own pool on Uniswap v3. Therefore, there is no cross margin between markets. This also means that if your ETH/USDC market is at risk of being rebalanced due to margin usage, your GMX/USDC market is completely unaffected.
Available Margin
When you deposit collateral into a market, the available margin you have to trade with is already leveraged up to 10x depending on the asset traded.
Margin Usage
Margin usage is the measure of assets borrowed from the Good Entry lending market each time you open a position. When your margin usage goes beyond 99%, your positions would be reduced while maintaining your leveraged position.
Max borrowable
Refers to the max borrowable amount that you can use to open a long/short position. This liquidity is based on the users supplying their assets into the different geVaults available.
Activation price
If the market price goes above/below whether you long/short, your max loss is always capped at the activation price chosen.
The core principle where protection is derived is the asset denomination when the market price is above or below the activation price. Regardless if you long or short the asset, the max loss is always the activation price selected while the max gains are uncapped. The main risk is paying the hourly funding rate to maintain your position.
Below is the payoff profile if you would to long or short through protected perps
The UI would show the closest 2 activation prices based on the current market price. It is advised to look at the available liquidity, funding rate, and payoff graph before choosing the activation price that fits your needs.
There are only 5 easy steps to start trading!
1. Choose which market you want to trade ETH/USDC or GMX/USDC
2. Deposit collateral based on the market you have chosen
3. Choose if you want to long or short the asset
4. Choose the activation price and position size
5. Open Trade to start profiting while receiving protection
Uniswap v3 introduced concentrated liquidity which allows individual LPs to allocate their capital with granular control over the precise price ranges and fee tiers. These positions are represented by non-fungible tokens (NFTs).
Good Entry has taken this v3 technology further by concentrating liquidity into a single market price and decomposing the NFT into an ERC20 token. This ERC20 token retains the benefits and characteristics of the v3 NFT while creating a lending market. From a high-level overview, geVaults is the supply side while Protected Perps is the borrow side.
When you supply your assets into a geVault, you are taking on a market limit order position while earning swap fees.
This is achieved by concentrating all the liquidity into a v3 tick (price point with a 5-dps range, we call this activation price). On v3, this tick is represented by an NFT which we have decomposed into an ERC20 token which is then used on the supply side of a lending market. This is the fundamental concept of how geVaults work 🙂
When the market price is below the activation price, the geVault is denominated in the underlying asset. When the market price is above the activation price, the geVault is denominated in the stable asset. The geVaults’ two main yield-generating streams are the v3 swap fees and supply fees from the lending market. The closer the market price of the underlying asset in relation to the activation price, the higher v3 swap fees and supply fees are generated.
Because of the characteristic of geVaults to be denominated in a single asset type based on the market price of the underlying asset being high or lower than the activation price. This acts like a market limit buy or sell order where the market limit order price is the activation price.
In the event you want to buy ETH at a lower price, you can choose an appropriate activation price to deposit in USDC and once the market price falls below this activation price, your position would be denominated in ETH. In essence, you would have bought ETH at that activation price while earning huge yields.
In the event you want to sell ETH at a higher price, you can choose an appropriate activation price to deposit in ETH and once the market price goes above this activation price, your position would be denominated in USDC. In essence, you would have sold ETH at that activation price while earning huge yields.
From our UI, we would show you the geVaults with activation prices closest to the market price. As the payoff profile for the geVault is based on v3 swap fees and supply fees, the closer the activation price is to the market price, the higher the yield. Therefore, even if you want to sell/buy an asset and the activation price has been reached, you may not want to immediately withdraw your position as this is the time when the APR is the highest 😮
The main risk of using geVault is losing the potential of “buying” at the lowest price or “selling” at the highest price. As the underlying asset's market price falls, your positions would be denominated in the underlying asset which loses its value. As the market price of the underlying asset increases, you risk having your position be in stables instead of the underlying asset.
The geVaults works best during periods where the market price is trading sideways. To further manage this risk, it is recommended you choose an activation price that you are willing to sell/buy the underlying asset. Additionally, it is recommended that you invest in the markets (WETH/USDC or GMX/USDC) such that you are long-term bullish on the underlying asset.
Dollar Cost Average Buy
Let’s say that you have a bearish market outlook and want to dollar cost average down ETH. The market is currently trading between $1,600 to $1,700 and the current market price is $1,650. You can deposit part of your allocated USDC into the ETH-1600 geVault to earn yield. When the market price of ETH drops below $1,600, the ETH-1600 geVault is denominated in ETH and you would have essentially bought ETH at $1,600 while earning additional yield.
Dollar Cost Average Sell
Let’s say that you have a bullish market outlook and want to sell some ETH at $1,700. The market is currently trading between $1,600 to $1,700 and the current market price is $1,650. You can deposit part of your ETH into the ETH-1700 geVault to earn yield. When the market price of ETH goes above $1,700, the ETH-1700 geVault is denominated in USDC and you would have essentially sold ETH at $1,700 while earning additional yield.
Maximize your yield on stables
Let's say you think the market will go sideways with a slightly bullish nature during a fixed timeframe. You can deposit a part of your stables into the geVault that has the highest yield. As the price of the underlying asset trends upwards, your position is always denominated in stables and you can reposition your assets into the next geVault to continue earning high yields in the form of stables.
Maximize your yield on underlying assets
Let’s say you think the market will go sideways with a slightly bearish nature during a fixed timeframe. You can deposit part of your underlying asset into the geVault that has the highest yield. As the price of the underlying asset trends downwards, your position is always denominated in the underlying asset and you can reposition your underlying asset into the next lower geVault to continue earning high yields while accumulating more underlying assets.