Horizon Academy
English V3
English V3
  • Horizon Academy
  • Horizon Protocol
    • Introduction
      • Tokenomics
      • Business Model
      • Synthetic Assets - zAssets
    • Security Audit
    • Community
      • How to Initiate a HIP
      • HIPs
        • HIP-23 Revenue Sharing Model: Intent-based System Phase one
        • HIP-22: Create a zUSD - USDC pool on Pancakeswap V3
        • HIP-21: Stop Incentives to the zBNB - BNB pool on Wombat Exchange
        • HIP-20: Suspend zMATIC Market and Introduce zPOL Ahead of MATIC to POL Migration
        • HIP-19: Temporarily reduce C-Ratio to 350%
        • HIP-18: Add DOGE and SHIBA to Horizon Futures
        • HIP-17: Add DOT, AVAX, and MATIC to Horizon Futures
        • HIP-16: Add XRP, ADA, and LINK to Horizon Futures
        • HIP-15: Add SOL to Horizon Futures
        • HIP-14: Reduce Trading Fees during Horizon Futures Promotional Period
        • HIP-13: Suspend zNVDA market ahead of Stock Split and convert zNVDA to zUSD
        • HIP-12: Updated Utilization of zUSD & zBNB Liquidity
        • HIP-11: Redirect HZN from EARN Pool to PancakeSwap as ‘Bribe’ using Cakepie
        • HIP-10: Use zAssets from Community Fund staking to provide liquidity on Wombat via Yield Aggregator
        • HIP-9: Redirect HZN from EARN Pools to Wombat Exchange as ‘Bribes’
        • HIP-8: Move the zUSD-BUSD and zBNB-BNB Liquidity Pools to Wombat Exchange
        • HIP-7: Utilize the Community Fund for Additional Liquidity
        • HIP-6: Lower Target C-Ratio to 600% from 700%
        • HIP-5: List New zAssets
        • HIP-4: Use Keepers to Close Weekly Fee Periods
        • HIP-3: Suspend zTSLA ahead of Stock Split
        • HIP-2: Lower Target C-Ratio to 700%
        • HIP-1: Create incentivized zBNB/BNB pool
      • Community Grant Program
    • FAQs
  • Stake & Earn
    • Introduction
    • Staking on Horizon Protocol
      • Staking and Rewards
      • Mint, Burn, and Claim
      • Collaterialization and C-Ratio
      • Liquidation
      • Managing Risk
      • C-Ratio Strategies
      • Hedge your Portfolio
    • Interfaces
      • Account - Escrow
      • Account - Authorize
      • Account - History
    • Guides
      • How to Stake by Minting zUSD
      • Adding Liquidity for zUSD and zBNB pools
      • Add Liquidity for HZN-BNB
      • Remove LP Tokens for zUSD-BUSD Pool
      • Setting Up Chainlink Automation
  • Educational Articles
    • Glossary and Definitions
    • What are DeFi Derivatives and how are they used
    • A Brief History of Synthetic Assets and Financial Derivatives
    • DeFi Derivative Projects
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  • What is Debt Hedging?
  • How to Hedge your Debt in Horizon Protocol
  1. Stake & Earn
  2. Staking on Horizon Protocol

Hedge your Portfolio

In Horizon Protocol, your Debt Balance fluctuates as a percentage of the Global Debt Pool. To properly hedge the Global Debt Pool, it is recommended to hold zAssets that mirror its composition.

What is Debt Hedging?

Debt hedging involves mitigating the risk of price movements affecting your asset(s). In the context of your Horizon Protocol portfolio, the value of the Global Debt Pool fluctuates due to changes in asset prices, which can impact your debt.

For instance, imagine the Global Debt Pool comprises 30% zBNB and 70% zUSD, and the price of zBNB rises. If your portfolio consists entirely of zUSD, your Debt Balance will increase, requiring extra zUSD to cover the difference.

Conversely, if the Global Debt Pool has 30% zBNB and 70% zUSD, and the price of zBNB falls while your portfolio holds 100% zUSD, your Debt Balance will decrease, resulting in an excess of zUSD, more than needed to repay your debt.

To counteract this risk, the recommended approach is to mirror the composition of zAssets in the Global Debt Portfolio. This helps ensure that the price fluctuations between the Global Debt Pool and your zAssets remain relatively consistent.

How to Hedge your Debt in Horizon Protocol

Horizon Protocol features an Account page that provides users with a clear overview of their portfolio's status. Among the valuable data displayed on this page are options to hedge your debt by mirroring the global portfolio. It offers users suggested hedge examples to help them maintain a healthy ratio when zAssets fluctuate in price.

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