A step-by-step guide to opening and managing your Vault

This page means to be a handy and easy to follow guide to learn how to create and manage your first Vault at Summer.fi.

Table of contents


The figure shows a flow chart with a summary of the whole process, to be used as reference. We'll go through each one of the steps below.

The dot at the top is the starting point: A new user, with no prior interaction with Summer.fi, wants to create a vault.

There are some prerequisites to start the process:

  • You will need a compatible wallet with supported collateral to be deposited.

  • Among the supported wallets you will find Metamask, Trezor, Ledger, MEW, and a few more.

  • Maker Governance determines supported collateral assets, and the updated list can be seen at our products page.

Connecting for the first time

At the top right corner of Summer.fi, you will find a "Connect Wallet" button. You should see a screen similar to the image below

Choose your wallet provider and confirm the connection. The website will require you to sign a message with your wallet. This has no cost, and it's a way of verifying your ownership of the wallet.

After the verification completes, you will have to read our Terms of Service, and if you agree with them, you can continue using our products.

If you completed all the previous steps, you can now use your wallet to interact with Summer.fi.

Choosing a product

Currently we offer two products: Borrow and Multiply. You can read more about each one of them in their respective Knowledge Base articles, by following the links. Also, we have another article explaining the differences between a Borrow Vault and a Multiply Vault.

In any case, you should choose the asset you will use as collateral, and the type of vault you want to open. Some collateral assets have different types (for example, there are ETH-A, ETH-B and ETH-C Vaults for Ether) and they differ in the minimum collateralization ratio, dust limit and stability fee.

Simulating a new position

Once you've decided on the product and type of Vault to open, you can start simulating your Vault. Depending on the product you chose, the page will look different.

For this example, we will use an ETH-B Vault, however, the process is similar for any other supported collateral.

Multiply Vault

For Multiply Vaults, you must input the amount of collateral to deposit, and the Multiple value to use. As shown in Fig. 5, the amount of collateral is entered as a number in the text box, and the multiple is configured by sliding the control.

Once the inputs are set, you can see a real-time simulation of all the relevant parameters of the vault, given your inputs. These values can change anytime if you modify any input, or if the collateral price varies. The critical parameters to monitor here are the Dust Limit (the minimum amount of debt you can generate when using Multiply), and the Liquidation Price / Collateralization Ratio.

The more you increment your multiply position, the riskier it becomes. You can see all the details in the "Order information" box.

Borrow Vault

For Borrow Vaults, you will need to input the amount of collateral to deposit, and optionally the amount of Dai to generate. You can create the vault and deposit collateral without generating any debt in Dai, however, remember that if you intend to deposit collateral now and generate Dai later, you will have to pay gas fees for another transaction.

The simulation will show the health status of your Vault. The important parameters to monitor here are the Collateralization Ratio and the Liquidation Price.

Setting up a Proxy

To interact with Maker Vaults, you must deploy a Proxy contract. This has to be done once for every account (that is, wallet address) used. You can then use this Proxy to create and manage any amount of vaults.

Since we're assuming this is the first time you use Summer.fi for creating Vaults, you will need to deploy this Proxy contract. This is done automatically by the application when you click "Setup Proxy" , but it will need you to send a transaction with your wallet. As it's the case with any Ethereum transaction, it has a gas fee associated. This will not open your vault, it will deploy the proxy.

For all your next interactions with Maker vaults from this account, you won't need to deploy the Proxy again.

Creating your position

This is the step where your Vault gets created. You will need to send another transaction from your wallet, and again, there's a gas fee involved.

You can create a virtually unlimited amount of vaults associated with your account, with no need to redeploy the Proxy contract. You can even have multiple vaults of the same type of collateral.

Now that your vault is open, it is a good time to remember how to assess your Vault's risk to avoid liquidations.

Managing your vaults

As stated above, one of the tasks associated with owning a vault is managing your positions to avoid liquidations, that is, to avoid the process where your collateral is sold to repay your debt in case your Vault becomes undercollateralized. Since there's a high penalty fee associated with this process, there's incentive for you to avoid it.

You can see all your currently opened Vaults by clicking on “My Positions” in the top navigation bar. Modifying any Vault’s parameters is possible by clicking on the “Manage Vault” buttons.

We'll go through all actions you can perform on an open Vault.

Adjust your position

To avoid liquidation, your Vault's collateralization ratio should be higher than the minimum collateralization ratio for the Vault type at all times. Since the collateralization ratio is calculated as the vault outstanding debt concerning the collateral value deposited, you can increase the ratio by adding more collateral or repaying your debt.

On the other hand, there may be some situations (for example, if the collateral price increases) where you may want to withdraw collateral or generate more Dai debt with the collateral deposited.

All actions except "Adjust" are available for Borrow and Multiply vaults, but the interface is different.

Add collateral

You can deposit more collateral to your Vault at any time, from any account. This is a useful feature of Maker Vaults that allows you to potentially save your Vault from liquidation even if you don't have access to the account that owns the Vault.

Adding collateral will increase the collateralization ratio of the vault. You can simulate what the new values will be before depositing, to make sure your new ratio is safe.

In Borrow Vaults, you can generate Dai in the same transaction. In Multiply Vaults, you can modify the multiple factor.

Withdraw collateral

If your Vault's debt allows you, you can withdraw part or all of your collateral at any time. This may be a risky action, given that for a constant debt, withdrawing collateral makes the collateralization ratio decrease. Take care not to leave your vault with a high risk of liquidation.

This action can only be performed by the Vault's owner.

Generate Dai

This action will generate Dai against your deposited collateral, increase the debt of your vault and, as a consequence, decrease your collateralization ratio. You will have the generated Dai available in your wallet.

This action can only be performed by the Vault's owner.

Payback Dai

Like the Add Collateral action, any account can pay back part or all of the debt in your Vault using this action. This will increase the collateralization ratio of the Vault.

You must authorize the contracts to spend your Dai on your behalf, by clicking on the “Set DAI allowance” button. You can choose the amount of your allowance, but you will need to allow at least the amount of Dai you are willing to pay back.

Adjust your multiple factor

This action is only available for Multiply Vaults, and allows the owner to adjust the risk of the Vault by modifying the multiple factor. By moving the slider you can alter the resultant liquidation price and collateralization ratio of the Vault.

Close your vault

Closing your vault is the process that allows you to cancel all your outstanding Debt and recover your collateral.

For a Borrow Vault, this process is manual. You will have to pay back all your Dai debt and then withdraw your collateral. You can take advantage of Multiply Vault’s “Close Vault” action, which allows you to repay your vault’s debt and withdraw either Dai or collateral, all in a single transaction. Please note that Multiply Vaults actions have a fee associated with them.

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