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Shorting on Hundred Finance
How to leverage short using the Hundred Finance protocol
In the previous section the process of longing using Hundred Finance was explained. In this section the process of shorting, or betting against crypto, will be discussed.
Note: For the sake of simplicity, this explanation assumes the crypto asset being shorted is ETH and the unit of account is the US dollar. This doesn't, of course, have to be the case.
Shorting an asset like Ethereum on Hundred Finance is a simple process with three steps that can optionally be repeated according to the risk appetite. For the sake of providing a concrete example, we'll use the Arbitrum deployment.
  • A user connects their wallet to Hundred Finance as normal before approving and supplying USDC (or any stablecoin).
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  • It is then necessary to enable USDC as a collateral. This is done by toggling the collateral option to the right on the main UI.
  • Once the asset is collateralized, a proportion of the collateral's value can be borrowed in any of the cryptocurrencies available. This proportion is expressed as a Loan-to-Value (L2V) percentage. For USDC the L2V is 80% of the collateral's value. The asset that is borrowed is the asset that will be shorted.
Next, this borrowed ETH (AETH on Arbitrum) can be used to buy more USDC on any exchange or through a DEX aggregator (DODO, for example). Due to slippage for carrying out such a trade, as well as fees paid for doing so, there are some additional costs added to shorting. These costs will also be incurred when closing the position, as it will be necessary to purchase back the borrowed asset (hopefully using less USDC than was received).
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  • As can be seen from the above screenshot, slippage for buying 7572 USDC with ETH can result in less than the spot value of the ETH being received. Nevertheless, the USDC can then by supplied to Hundred Finance to create the leveraged short position.
  • This process can optionally be repeated with steadily decreasing amounts of the borrowed asset in order to increase leverage, as well as the risk of the position being liquidated.

Assumes USDC supplied and ETH borrowed.
Original Position
Leveraged Position
10,000 USDC
17,572 USDC
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- 3 ETH (plus ~7600 USDC immediate rebuy cost)
= $10,000
= $9,972
As can be seen in the above chart, the slippage and fees incurred creating the leveraged position mean it starts approximately $28 in the negative. However, If during the course of holding this leveraged position the price of ETH were to go down by 50%, the following would then be the case:
Original Position
Leveraged Position
10,000 USDC
17,572 USDC
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- 3 ETH (plus interest) ~3800 USDC to rebuy
= $10,000
= $13,772
As can be seen here, the leveraged position, assuming it is closed, has resulted in a profit of over $3,500 versus holding unleveraged USDC. Given the low cost of borrowing on Hundred Finance, this process could be used as a relatively simple means of longing cryptocurrencies for long periods.
As the account holder could borrow more ETH upon adding their purchased USDC back to the platform, it would be possible for them to greatly increase the size of their position relative to the quantity of their underlying assets. For example, shorting a supplied asset with an 80% Loan-to-Value ratio makes leverage of up to 5x theoretically possible.

Leverage is not without risk. If the value of the borrowed asset were to rise (a frequent and sudden occurrence in the volatile cryptocurrency market) then there is the possibility that the account could be liquidated due to it no longer sufficiently backing the assets borrowed. What is more, the chances of this increase exponentially with the amount of leverage taken and it would, in theory, be possible to be locked in a position (without using additional capital to rebuy the borrowed asset) due to the need of the protocol to remain overcollateralized. Nevertheless, should the desire to short exist, Hundred Finance is set up to be especially well-suited to the task of leverage trading and can thus be a valuable tool.
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