# Overview

Engain as a product has a clear list of problems and solutions stated here that can provide an idea of how it can be useful for everyone.

### **The core problem Engain solves is that DeFi is too diverse and complicated to use right away to have a steady, predictable profit.**

### **General Problems of DeFi Yield Farming**

**Impermanent Loss (IL)** \
Impermanent losses occur when one asset in a liquidity pair fluctuates relative to the other asset, leading to an overall loss of equity. This type of loss is amplified in leverage yield farming positions as market movements may move the liquidity pair’s volatile asset (AVAX, ETH, BTC) more dramatically when leveraged.\
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**Market Sensitivity**\
Investors suffer losses (sometimes extreme) due to the downward trends of the crypto markets, especially when they set themselves in leveraged long OR short positions.

**Liquidation** \
When investors seek higher yields through leveraged positions, significant market movements against their position can lead to liquidation, which usually entails a 10-20% loss on the principal assets.

**Unpredictable returns and misleading APYs** \
To secure TVL, many leveraged yield farm protocols advertise high rates of return (APYs), which inevitably fall short of their investors' expectations. This means that investors are unable to predict what their yields may be in the long term, in addition to feeling "misled" by returns that end up below the original target.

**Excessive position management** \
Most leveraged yield farming protocols require their investors to manually set up their market-neutral positions and then also manually rebalance them to ward off liquidation or bad debt ratios. This can result in being both time-consuming and overly complicated for the majority of users.

**Mismatch of risk vs reward** \
Conservative lenders looking for safe (albeit slightly lower) yields on an asset may suffer exposure to the risks involved with highly-leveraged borrowing. Aggressive lenders seeking higher yields may receive lower "risk-reward" gains as they are forced to share those yields with the more conservative lenders.

### **Solutions**

### Our main approach to the core problem is that we use strategies with multiple steps to make complicated, but fruitful yield farming simple.

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**Risk Management** \
Our strategies are rigorously tested for handling almost any market movement by effectively balancing both long and short positions. This type of position allows the investor to focus on profiting through yields without worrying about the price of the underlying volatile asset.

**Impermanent Loss Countermeasures** \
In addition to auto-compounding the underlying protocol yields, our strategies perform “rebalances” based on the situation to minimize the impact of impermanent loss over time.

**No Liquidations** \
Our vaults do not use a liquidation function. Bad debt ratios are automatically prevented through our rebalancing mechanisms.

**Real APR & PnL** \
Engain provides honest data in the form of APRs and PnL tracking. After forming their strategies based on their market outlook, the user’s only responsibility is to deposit the correct asset and enjoy steady returns.

**Automated Positioning** \
For our strategy vaults, we have automated all of the processes. Yields gained over time are automatically compounded into the principal, allowing our users to simply deposit and relax.
