Leverage / Leveraging is a technique used to amplify the outcome of an investment or trading decision. It is the act of taking on greater risk in hope of greater returns in shorter amounts of time.
There are many methods of employing leverage, some of the more popular ones are:
– taking on debt positions (borrowing funds)
– Collateralizing / Over collateralizing loans
– Lending Assets and requesting payback in the lent assets (Ethereum & expecting price appreciation over the course of the loan)
As a general rule of thumb, newer market participants are advised not to utilize leverage because of its sophisticated nature.