⚔️Short Trade

Let's consider a scenario where token A is currently trading at $100 on PanCakeSwap, and you choose to short it using 1000 BUSD (your capital) with 5️X leverage. This implies that you'll borrow A tokens worth 5000 BUSD (equivalent to 50 tokens). On Bubblebot, you'll obtain these tokens from the lending pool, which is established by individual liquidity providers who have deposited their A tokens into the lending pool.

When you execute a short trade, you sell the 50 borrowed A tokens and receive revenue of 5000 BUSD . This revenue, combined with your initial 1000 BUSD (totaling 6000 BUSD ), serves as collateral for your short position. As you've borrowed A tokens, you are required to pay interest on your loan. Let's assume that after some time, your payable interest amounts to 10%, which means you now owe 55 A tokens to the pool.

However, if the price of A-token drops to $80 per token, the value of your position will be: $6000 - 55 * $80 = $1600

Considering that you initially invested only $1000 of your own money, your net profit will be $600 or 60%.

Liquidation

If the price of the token you shorted rises, you can potentially incur a multiplied loss, or even lose all the capital invested in the trade position.