How to open a short position

To begin Short Selling on Optimistic Kwenta, visit the Shorting tab on Kwenta.

Click the 'Connect Wallet' button and connect your Web3 wallet.

Make sure you're connected to the Optimism L2 Network

When connected, traders can open short positions by entering a sUSD collateral amount. Kwenta will display the asset and the amount being shorted (Borrowed) in the field to the right of "C-Ratio".

Collateralization ratio (C-Ratio) on Kwenta defaults to 200% but can be adjusted down to 130%, and as high as the trader desires.

Once ready, click 'Approve' to begin the authorization process, and then ‘Submit Order’ to submit the transaction.

Shorting on Kwenta accrues interest based on market skew. If there are more longs than shorts, the interest rate will be 0%. However, if there are more shorts than longs on a given Synth, interest will be charged in proportion with the skew.

Managing a Short Position

Opened positions, and their available details, are displayed directly below the order entry panel. The image below gives an example of the information available:

  • Date the position was opened
  • The asset name and size of the Short Position
  • Collateral sUSD tied to the open Position
  • Liquidation Price - Price at which the system will start reducing your position to bring your C-Ratio back above 120% (forcing you to realize losses)
  • Accrued Interest - Any interest the system paid while the position was open
  • Your C-Ratio - Displays your collatorization Percentage
Your C-Ratio - This is dynamic and will fluctuate. When your short has a positive PNL (profit and loss value) it will go up, while a losing position will see a reduction in C-Ratio. Outside of market swings, traders can manually adjust their c-ratio by adding or subtracting Collateral from the open position.

To modify a position, click the edit icon (on the far right, looks like a pencil).

This leads traders to the Manage Position page where they can add or remove collateral in sUSD (which will increase or decrease their c-ratio), increase or reduce their position size, or close their position entirely. Closing the entire position can be done in sUSD while, increasing or decreasing a positions size requires traders to have the underlying asset on hand.

Example: If the trader has an open sETH short position and they wish to add or reduce (partially close) this position, they first need to purchase sETH on Kwenta exchange, then in the "Manage Positions" add to or reduce their position with the purchased sETH.

How to add Leverage to Shorts

Traders can technically apply leverage to their shorts. Using the sUSD received from opening a short on Kwenta, traders can add to an existing short or open another. Leverage increases potential gains or losses from a trade, trade responsibly.

If your C-Ratio dips below 120%, your position will begin liquidating itself, (selling borrowed assets) until the minimum C-Ratio of 120% is met again. Traders can stop this from happening by adding additional collateral to a position as needed or reducing/closing the position before it drops below the minimum C-Ratio.

Get Started

Try Short selling on Kwenta!

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