Let’s break it down with examples to see how the farm behaves and what the result will be.

For the example, we will use the STORM/TON farm with a STORM price of 0.0057 TON.

Let’s assume the farmer has 100 TON.

Option #1: He deposits them as collateral and takes a leverage of 2.5 in the STORM/TON farm.

Full value: 125 TON + 21830 STORM = X LP

Collateral: 100 TON

Credit: 150 TON

Estimated boost: x STORM

1️⃣. What will happen if TON grows relative to STORM:

• The amount of TON in the LP decreases.
• The amount of STORM in the LP increases.

This means that upon closing the farm, the farmer will receive more STORM and less TON. At the same time, the credit was taken in TON and at the moment of opening the position, it’s already more than the amount of TON in the Full value (this always happens when leverage > 2). For the position, this means that STORM needs to be converted from the LP into TON, the credit needs to be reclaimed, and the remainder is returned to the farmer.

If the boosts do not cover the deficit due to the growth of TON, the farmer will be in a loss. However, an important point here is that over time, the farm may cover the loss thanks to the boosts, which is why farming is most profitable over the long term.

2️⃣. What will happen if TON drops relative to STORM:

• The amount of TON in the LP increases.
• The amount of STORM in the LP decreases.

It’s likely the farmer will end up in a situation where the TON in the LP > the TON in the credit. In this case, when closing the position, the farmer will return part of the TON. There is no need to sell STORM because the credit is already covered.

In the end, the position will return the remaining TON + STORM from the LP + boosts to the farmer.

Option 2: The farmer also has 100 TON, but with a leverage of 1.5.