10. Deloop
Last updated
Last updated
Delooping is the process of strategically unwinding leveraged positions on Dough Finance, allowing you to repay debts, reduce exposure, and improve your financial health. This guide will take you through the steps to deloop your assets, effectively managing and potentially eliminating your debt.
Step 1: Initiate Deloop
1. Access the Deloop Function: Navigate to the "Your borrows" section within your DeFi Smart Account (DSA). Locate and press the **"Deloop"** button.
Step 2: Review Your Debt
1. Assess Your Current Debt: A popup will display all your USDC debts. For this example, you have a total debt of 77,782.4619 USDC.
Step 3: Configure the Deloop
1. Set Repayment Amount: Click on "100%" to initiate full debt repayment. The system will first utilize any available USDC collateral (3,241 USDC in this case).
2. Cover Remaining Debt: The remaining debt amount, 74,541 USDC, will be covered by converting sufficient ETH into USDC.
Step 4: Confirm Deloop
1. Review Deloop Details: A confirmation popup will provide a detailed summary of the debt being repaid, the changes in your Health Factor before and after delooping, as well as the associated gas fees.
2. Execute the Deloop: Once you are ready, press the "Confirm Deloop" button to proceed.
Step 5: Complete the Transaction
1. Sign the Transaction: Confirm and sign the deloop transaction using MetaMask or your preferred EOA wallet.
2. Wait for Transaction Finalization: Monitor the process until it is completed.
Step 6: Verify the Outcome
1. Confirmation of Completion: Once the transaction is finished, a message stating "All done!" will appear. Press Back to return to the main dashboard.
2. Check Your New Balance: Ensure that your USDC debt has been fully repaid and review your updated ETH collateral.
Benefits of Delooping
Debt Reduction: Efficiently reduces or eliminates your outstanding debts.
Improved Health Factor: Enhances your financial stability by improving loan-to-value ratios.
Lower Liquidation Risk: Reduces the likelihood of liquidation in volatile markets.
Considerations and Risks
Market Exposure: Price fluctuations during the asset swap could impact the effectiveness of debt repayment.
Transaction Costs: Includes potential slippage and gas fees, which could be significant depending on network conditions.
Reduced Collateral: Utilizing ETH to repay debt decreases your total collateral, which could affect future borrowing power.
Conclusion
Congratulations on completing the delooping process and effectively managing your financial positions on Dough Finance! By understanding and applying these strategies, you can maintain control over your assets and avoid common pitfalls associated with high leverage.
Next Steps
Visit the "Contracts Section": For further technical details and smart contract interactions.
Review the "Debt Collateral Ratio Guide": To deepen your understanding of the financial metrics and risks associated with borrowing and looping.
This guide concludes your comprehensive journey through the Dough Finance Protocol, empowering you with the knowledge to navigate complex DeFi operations successfully.
