Auto-Buy and Auto-Sell

Auto-Buy and Auto-Sell allow you to manage your Vault’s collateralization ratio automatically.

Auto-Buy and Auto-Sell allow you to manage your Vault’s collateralization ratio automatically. With a few clicks, you can create an automation strategy that executes at a pre-configured trigger point, moving your vault's collateralization ratio to this target value.

Auto-Buy and Auto-Sell are currently available for Maker, Aave v3 and Spark positions

Auto-Buy allows you to reduce your vault’s collateralization ratio by generating more debt which is swapped for collateral and deposited into your vault. This may be beneficial in a bull market where the value of the Vault’s collateral increases. For example, you might want to keep your collateralization ratio below a certain amount. You can generate more debt and swap it for collateral whenever that trigger is hit. This gives you increased exposure to the collateral asset.

Auto-Sell allows you to do the opposite: this feature automatically repays your Vault’s debt, increasing the collateralization ratio and de-risking your Vault without closing it.

You can use both strategies at the same time, and combine them with Stop-Loss protection. This will effectively protect you from liquidation while keeping your Vault’s collateralization ratio between your configured limits.

Please Note: Automation isn't guaranteed to work 100% of the time. Several factor can relate to its success. These include liquidity, volatility and gas. Read about the risks associated with the position.

Costs, fees and risks

The transactions will incur gas costs when the Auto-Buy and Auto-Sell strategies are executed. The gas costs are automatically deducted from your position, so it is important to configure the maximum gas fee you are willing to pay.

As Auto-Buy and Auto-Sell are automated tools to modify your Vault’s multiple factor based on a price trigger, the fees paid are 0.2% of the required swap in the transaction. These are effectively the same fees paid when manually triggering Multiply Vaults’ adjust multiple action.

There are some risks associated to these features, including but not limited to:

  • Oracle manipulation: The triggers are based on the next Maker Oracle price, so if a bad actor can somehow manipulate this value, it can potentially affect your position by forcing a buy or sell operation on your Vault.

  • Price volatility: Maker Oracles update every hour, but the buy and sell price of the collateral is based on spot price, which changes in real-time. This can potentially make the Auto-Buy and Auto-Sell prices not optimal.

  • Unknown exploits: Even though the Auto-Buy and Auto-Sell contracts are audited, this doesn’t guarantee they are 100% bug free.

Can both strategies be combined?

On a single vault you can set up an Auto-Buy, an Auto-Sell and a Stop-Loss. This allows you to completely automate your collateralization ratio in both up and down markets, as well as automatically protecting your vault from liquidation.

Here’s an example:

You set up an Auto-Buy to trigger at a collateralization ratio of 300%, bringing it back to a target of 250%. This gives you increased exposure to your collateral asset in a bullish market. You also set an Auto-Sell to trigger at a collateralization ratio of 200% bringing it back up to a target of 250%. This reduces your exposure in a bearish market.

And as a final protection in a bear market you set up Stop Loss protection at 180% to close out your vault in the event of a rapid price drop. In this example it will only execute if the price drop goes through both your Auto-sell trigger and your stop-loss trigger in one price update. The Stop-loss protection will close out your vault to debt or collateral before it is liquidated.

At this point you may be concerned about causing a cascade of automated transactions, as one’s target ratio hits another’s trigger ratio. We thought of that, and have handled it with dynamic limits to the parameters you set, preventing an accidental cascade.

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