What is a decentralized short position?
A short position is where an asset is first sold on credit at a higher price and then bought back later at a lower price, netting the user the profit in between. SingularityDAO includes a DeFi version of this shorting instrument. How it works is that the liquidity pool lends crypto assets to DynaSet Asset Managers (DAMs) so they can sell assets on credit, creating short positions in an entirely decentralized way. Then, when the DAM closes the short position, it pays the crypto it has borrowed back to the liquidity pool (at, they would hope, a now reduced price).
1 Like