LP Short Strategy

The Most Capital-Efficient Way to Short?

What if you could short an asset by posting just 30% capital, with no borrow costs, no asset sourcing, and earn both PnL and interest? That’s what LPs in Own Protocol can do by backing synthetic exposure without holding the asset.

This isn’t just efficient. It’s powerful.

Short Mechanics, Simplified

Starting Setup

• LP backs 500 synthetic units at $100

• Synthetic value = $50,000

• Posts $15,000 on-chain (30%)

• Holds no asset off-chain

Asset Falls to $80

• Synthetic value = $40,000

• LP profit = $10,000 using only $15,000 in capital + Protocol Yield

Why Own Is Built for Shorts

• No need to borrow assets

• On-chain margin model = minimal capital at risk

• Interest yield on top of PnL

• All enforced by protocol logic

Summary

• Go short with just a fraction of the capital

• Earn on both price movement and protocol interest

• Ideal for directional LPs who want to profit from downturns

• And for sophisticated traders who know how to play the rebalance game