Managing your Maker Multiply position

In this article, you're going to learn how to manage your Multiply Vault to avoid liquidations.

Managing your vaults

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. It is possible to modify any Vault’s parameters by clicking on the “Manage Vault” buttons.

We'll go through all actions you can perform on an open Multiply Vault. Take into account that Multiply actions (such as creating a new Multiply vault, closing a vault or adjusting the multiple factor) have fees associated with them.

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's outstanding debt in relation to the collateral value deposited, you can increase the ratio by adding more collateral, or by 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.

You can also adjust your multiple factor to increase or decrease your exposure to the collateral.

Deposit 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, and decrease the multiple factor. You can simulate what the new values will be before depositing, to make sure your new ratio is safe.

You can also adjust your multiple factor manually in the same transaction, by clicking on the "Increase multiply with this transaction" text, as shown in the video below.

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 and the multiple factor increase. Take care not to leave your vault with a high risk of liquidation.

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

Withdraw DAI

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

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

Deposit DAI

Similar to the Add Collateral action, any account can deposit Dai to pay back part or all of the debt in your Vault using this action. This will increase the collateralization ratio of the Vault, and decrease its multiple factor.

You will need to 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 allows the owner of the Vault 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.

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.

Watch this video tutorial to learn all the possibilities in a Maker Multiply Vault