Markets · Beginner lesson · about 2 minutes
Leverage
Borrowed exposure that magnifies both gains and losses.
The short answer
Leverage lets a position control more value than the trader supplied. The lender, exchange, or protocol can liquidate collateral when rules or prices reach a threshold.
In plain English
Leverage lets a position control more value than the trader supplied. The lender, exchange, or protocol can liquidate collateral when rules or prices reach a threshold.
The details differ by network and service, so use the linked sources and the project’s own documentation when a decision depends on current behavior.
What can go wrong
Read this before you act.
A small market move can erase collateral, and interest, fees, oracle errors, and forced sales add risk.
Check your understanding
A few questions. Not a test.
Pick an answer to see why it's right or wrong. There's no score to unlock.
Sources and corrections
This lesson is a starting point. The two sites below are good general places to learn more. Please tell us if something needs fixing.