> For the complete documentation index, see [llms.txt](https://docs.snowballfi.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.snowballfi.app/documentation/protocol-mechanics/leverage.md).

# Leverage

*Using leverage carries risk. If your loan defaults, your entire $SNOW collateral may be burned.*

## **Leveraged Borrowing (Looping):**

* **Advanced Feature:** Users can borrow `$AVAX` against their `$SNOW`, use the borrowed `$AVAX` to mint or buy more `$SNOW`, and repeat the process — known as looping.
* **UI Support:** A simple one-click looping interface is available directly in the Snowball dApp, allowing users to open and close positions seamlessly.
* **Fee Discount:** When minting `$SNOW` through a looped position, the minting fee is reduced from 2.5% to 1% to encourage capital-efficient looping.
* **Liquidation:** If a leverage position defaults, then the `$SNOW` collateral is burned, causing the ratio of `$AVAX` per `$SNOW` to increase. `$SNOW` collateral from liquidated positions are burned collectively, every day, at 00:00 UTC.

<figure><img src="/files/cMZ4FsyKqaElikWvStv7" alt=""><figcaption></figcaption></figure>

{% hint style="info" %}
Using looping allows users to create leveraged $SNOW exposure. If a position is max looped, no additional $AVAX can be borrowed due to the diminishing AVAX returned in each loop cycle.
{% endhint %}

***

## One-click looping <a href="#one-click-looping" id="one-click-looping"></a>

To simplify the process, Snowball offers one-click max looped positions via the dApp. These use internal flashloans to open the entire leveraged position in a single transaction.

This makes it fast and easy for users to both enter and exit leveraged strategies with minimal manual steps.

***

## Flash Loans

Once `$SNOW` reaches its supply cap, users will need to buy `$SNOW` on secondary markets (e.g., Pharaoh, Blackhole) to use as collateral — it can no longer be minted.

To continue supporting looping, arbitrage, and efficient leverage, Snowball will offer flash loans natively via the dApp.

* 1% fee, no upfront collateral required
* Must be repaid within the same transaction
* Enables closing a position using the existing `$SNOW` collateral
* To use this feature, select "Existing Collateral" in the repayment modal

This provides a smooth and capital-efficient way to unwind positions without sourcing external `$AVAX`.


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