Take Profit: An Automated Exit Strategy by Oasis.app
We move forward along the path of allowing you to optimize your position in Oasis.app. We are happy to announce the "Take Profit" feature: remove emotion from the exit strategy and lock-in your profits without lifting a finger!
What is Take Profit?
Take profit is a strategy designed to automate your exit strategy. You set a Target Price for your collateral asset and this is your Take Profit Trigger. The app will constantly monitor it, and when the trigger is hit, Take Profit will automatically sell your collateral to Dai and close your Vault.
Lock-in your profit, even when you’re away from your keyboard.
Why should I use Take Profit?
When you open any financial position, you are taking on some level of risk, but you are also hoping for a reward. Risk and reward can sometimes cloud our judgement, preventing us from taking actions that are objective and emotionless.
Therefore, it is sensible to have an exit strategy before entering any position. By doing this, you are setting your definition of success and failure up front, the decision on when to close your position is made before you take on any risk.
There are two sides to an exit strategy.
- First, there is the exit to the downside, which prevents losses beyond a certain level, you can already automate this with Oasis.app Stop-Loss Protection.
- Second, there is the exit on the upside, which locks-in profit at a certain level, this is where Take Profit comes in. By using it, you completely remove your emotions from your exit strategy, which will now be executed automatically on your behalf.
How do I set up Take Profit?
To set up a Take Profit you need to have an existing Borrow or Multiply Vault on Oasis.app.
- Go to the “Optimization” tab and select the Take Profit Banner
- Select to take your profits in ETH or DAI.
- Select your Target Collateral price Select “Set up Take Profit”
How does Take Profit Work?
When you set up the Take profit on your Vault, you will be required to sign a transaction which gives permission for the Automation smart contract to allow vaults to be closed based on your selected parameters.
Once the transaction is confirmed on chain, keepers (workers that mainain automation) will monitor the next OSM price against your Take-Profit trigger. When the Take Profit trigger is hit, a keeper executes the trigger function by calling the Automation smart contract.
Take Profit works by automatically closing your Vault when the collateral asset reaches your “Target Price”. The automation smart contract sends a transaction to close your vault, which sequentially takes a flash loan, repays your Vault’s debt, unlocks and swaps your collateral, pays back the flash loan and sends any remaining funds (in collateral or DAI based on your selection) back to the vault owner’s wallet address. (See the diagram)
What are the Risks?
Please Note: Automation isn't guaranteed to work 100% of the time.
Several factors can relate to its success. These include liquidity, volatility and gas. Learn more about automation and how Oasis is building the best automation product on Ethereum →
Want more ways to optimize your Vault Strategy?
You can expect more Vault automation and optimization features in the near future. The team behind Oasis.app is working hard to ensure you have the tools you need to protect yourself from downside risk whilst maximizing your upside potential. Keep an eye on Discord and twitter for more updates on this soon.
Also, we recently started our Strategy Section of the blog, where you can find some useful tips, use cases and true stories.
October 27, 2022