Leverage Ratio Plain-English Explainer

WHAT IT DOES

This tool analyzes the leverage ratio of a position and explains it in plain English. It reads the wallet address or position ID, chain ID, protocol type (lending, perpetual, margin trading), position size and notional value, collateral amount and debt, leverage ratio, health factor and liquidation price, price feed for the asset pair, margin maintenance requirement and LTV ratio, protocol-specific risk parameters (liquidation bonus, margin call threshold), position entry price and current market price, price volatility and historical performance, collateral token liquidity depth, position PnL and unrealized gain/loss, and total portfolio exposure. The AI layer translates these on-chain metrics into a clear, actionable explanation — describing what the leverage number means in practical terms, how much a 1% price move affects the position, the distance to liquidation, and the implied risk before you open or modify a position. This helps you understand whether your leverage is conservative or excessive before committing capital.

HOW TO USE

Connect your wallet, select the network, and paste the wallet address or position ID you want to analyze. Select the protocol type and enter the asset pair. The tool will fetch the position data, calculate leverage metrics, and display the results alongside an AI-generated plain-English explanation. No transaction is required — this is a read-only operation. The AI explanation is generated from the exact data the tool reads, ensuring the guidance is grounded in what the chain actually shows.

TECHNICAL MECHANISM

The tool performs view calls to fetch position data from the protocol contract, including position size, collateral, debt, and price feed addresses. It calculates the leverage ratio by dividing the position size by the collateral value, and determines the health factor by comparing the collateral to debt at the liquidation threshold. The tool calculates the distance to liquidation by comparing the current price to the liquidation price, and estimates the price movement needed to trigger liquidation. It also calculates the effect of a 1% price move on the position value and PnL. All calculations are performed against the current block state, and the AI prompt is constructed entirely from the actual read results — never from assumptions — ensuring the leverage explanation is grounded solely in what the position actually shows. All reads are performed through the connected wallet's provider.

WHAT IT CANNOT SEE

This tool cannot definitively determine if leverage ratio is appropriate or safe — it only reads on-chain position data and calculates leverage metrics. It cannot detect off-chain market manipulation. It cannot predict future price movements. It cannot account for correlated asset crashes. It cannot detect hidden protocol risks or vulnerabilities. Calculations depend on price feed data which may be stale. It cannot guarantee liquidation predictions are accurate. It cannot assess whether leverage aligns with the user's risk tolerance. Analysis depends on available position data which may be incomplete. The AI explanation is generated from the data the tool reads and should be treated as informational, not as a guarantee of position safety.

PLEASE NOTE

EVM chains only. Explanations are AI-generated from data the app reads on-chain — always review what you are actually signing in your wallet before approving it. This tool is read-only and never initiates transactions.