Introducing Eleven Finance Leveraged Yield Farming

5 min readAug 1, 2021

Those who know, have known for a while, we have been planning a roll-out of our new and improved leveraged yield farming platform on the Polygon network for some time now.

We’d like to use this article to introduce this platform and talk through some of its features and benefits to the Eleven Finance ecosystem.

For a leveraged yield farming system to work, we need a lending side where collateral is lent by users, to the system or banks, to then be borrowed out. We then need a farming or borrowing side, where users are able to open farming positions with leverage, making use of borrowed funds from the banks.

Introducing the eleBANKS

With our launch on Polygon we will allow users to supply assets to a number of eleBANKS. These take deposits on single assets and reward lenders with an interest bearing equivalent token. The interest earnt by these tokens comes from a variety of sources:

Funds leant to borrows accrues an interest rate paid by the borrower
Funds not needed for lending on Eleven’s Leveraged Yield Farming are utilised in other protocols to earn a return (rather than laying dormant)
Further to this lenders accrue $ELE token rewards
Lenders may also benefit from additional incentivised lending opportunities as our platform matures (more on this in the future).

To lend assets to the any of the eleBANKS, it’s like depositing funds in any single asset vault on our platform. Simply filter vaults by ELE in the drop down filter menu. Then deposit funds in the relevant eleBANK. For eleBTC, eleETH and eleMATIC they require these assets to be in your wallet on the Polygon network. Once done supply by depositing and ensure you maximise your returns by ‘boosting’ the deposit by completing the stake step to earn autocompounding $ELE (pE11) as well. Remember the earned pE11 accrued can be harvested whenever you wish, but is already automatically deposited in the ELE vault on Polygon and autocompounding so you don’t have to manually do this.

For eleUSD lenders can deposit any amount of or combination of USDC, USDT or DAI on Polygon by selecting the amount of each asset and depositing this. There are 0 fees to deposit into any eleBANKS (aside from the small MATIC fees needed to complete Polygon transactions).

Once deposited in the specific eleBANK vault, users will be able to monitor their position through the vault page as usual. The number above the ‘deposited’ amount will increase with time as the position grows earning interest. When a user wants to withdraw they can simply. Select the eleBANK vault they are in, select ‘withdraw’ and remove all or part of their lending position.

In the case of eleBTC, eleETH and eleMATIC this will see their initial lent amount returned plus any interest accrued, with no withdrawal fee. They will receive the same asset they deposited. Withdrawing will trigger an automatic harvest of any pELE rewards a user has accrued which will be visible in the polygon ELE vault (as they are automatically autocompounding for you), should you wish to return these to normal ELE simply withdraw them from this vault as well.

In the case of eleUSD lenders can withdraw at any time as per the above process and get USDC back.

The one exception to users being able to withdraw at any time is if the amount of assets borrowed is very high compared with the amount lent. In this rare case, as assets are being borrowed out they can’t be withdrawn. This is unlikely but possible. If this occurs, the interest rate for lending is extremely attractive and for lending is very high, as a result the system is designed to and will self correct allowing users to withdraw. Keep in mind this situation is very rare, but is a learning as it did take place on our BSC leveraged yield farming launch, but only lasted a matter of minutes.

Leveraged yield farming

Eleven Finance to this point has largely been a yield optimiser. That is we take single assets or LP tokens and seek to help them grow exponentially through the power of automating compounding returns. We have a large network of vaults that allow users to deposit these assets into to get exposure to these returns/APYs.

But what if a user could seek this same exposure, but with leverage? Enter Eleven Finance’s Leveraged Yield Farming on Polygon.

To do this users select ‘Leveraged Yield Farming’ from the Eleven.Finance sidebar. Then will be greeted with a list of pools available to leveraged farm. To enter any of these pools select the Polygon network (the site will prompt a network change if you click the ‘available on Polygon’ button) otherwise if you are already here you will see an “Open Position” button. Selecting this, with your leverage multiplier set as you wish (up to x9 on stable/stable pairs and x2.5 for other pairs), will allow you to open a leveraged position by depositing collateral. Collateral type will be dependant on the bank utilised (eleBTC will need BTC, eleUSD will need any stable USDC, DAI or USDT for example).

Once this is completed your position will be visible lower down on the page. Under the ‘My Positions’ header. Here you will see the vault position you are in (Asset-Asset LP) and under this the eleBANK it is using. You will see the total size of the position (this will start at collateral x leverage amount). Hovering over the ‘?’ next to this will show your current collateral — this is the amount that you would be able to withdraw if you closed your position now — subject to withdrawal fees.

Next is the leverage column. This will start at your initial leverage position and move up or down dependant on a number of factors. If LP value drops versus collateral then leverage position will increase. Borrow fees (or interest rate) for leverage yield farming will also increase leverage position. Likewise if LP value increases versus collateral then leverage will drop. Rewards earnt and compounded to grow the underlying collateral value will also reduce leverage.

Debt ratio is the next column which is essentially another way of looking at leverage, as it is collateral / current position value.

In the final column the user has a button to ‘Adjust’ or ‘Close’ their position. Adjust allows the user to deposit more collateral, this will reduce leverage and debt position and as a result liquidation risk. Close allows them to close, with assets being returned to them in the form of what was deposited (initial collateral + or — gains or losses and — fees).