> ## Documentation Index
> Fetch the complete documentation index at: https://docs.limora.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Matching Overview

> Earn passive income by providing liquidity as a Matcher

As a **matcher** (also called a lender), you provide liquidity that enables leveraged trading on Limora. In return, you earn interest from traders who use your funds.

***

## How Matching Works

```mermaid theme={null}
sequenceDiagram
    participant M as Matcher
    participant L as Limora
    participant T as Trader

    M->>L: Deposit USDC
    Note over M,L: Funds available for matching

    T->>L: Open Long BTC
    L->>M: Match Request
    M->>L: Accept Match
    Note over M,T: Position Active

    loop Every Hour
        T->>M: Interest Payment
    end

    T->>L: Close Position
    L->>M: Return Funds + P&L
    L->>T: Return Funds - P&L
```

***

## The Matcher's Role

When you match a trade, you take the **opposite side** of the trader's position:

| Trader Opens           | Matcher's Exposure             |
| ---------------------- | ------------------------------ |
| Long (bet price up)    | Short (exposure to price down) |
| Short (bet price down) | Long (exposure to price up)    |

<Card title="Example">
  A trader opens a **10x Long BTC** position with 100 USDC collateral (1,000 USDC position).

  As the matcher, you provide 1,000 USDC and effectively have a **short** exposure:

  * If BTC rises 5%, you lose \~50 USDC but earn interest
  * If BTC falls 5%, you gain \~50 USDC plus interest
</Card>

***

## Why Match Trades?

<CardGroup cols={2}>
  <Card title="Earn Interest" icon="percent">
    Receive continuous interest payments while your funds are matched with
    active positions.
  </Card>

  <Card title="Market Neutral Strategy" icon="scale-balanced">
    With careful selection, balance your exposure across longs and shorts.
  </Card>

  <Card title="Passive Income" icon="coins">
    Once matched, interest accrues automatically without active management.
  </Card>

  <Card title="DeFi Yield" icon="chart-line">
    Earn yields typically higher than traditional DeFi lending protocols.
  </Card>
</CardGroup>

***

## Risk vs. Reward

### Potential Returns

| Scenario             | Interest | P\&L | Net Return |
| -------------------- | -------- | ---- | ---------- |
| Trader wins small    | +2%      | -3%  | -1%        |
| Trader loses         | +2%      | +5%  | +7%        |
| Trade closed quickly | +0.5%    | 0%   | +0.5%      |
| Trader wins big      | +1%      | -10% | -9%        |

### Key Risks

<Warning>
  Matching is not risk-free. You are exposed to price movements opposite to the
  trader's position.
</Warning>

1. **Market Risk**: Price moves in the trader's favor = your loss
2. **Duration Risk**: Longer trades = more time for adverse moves
3. **Leverage Risk**: High leverage trades mean larger potential swings
4. **Smart Contract Risk**: Technical vulnerabilities (mitigated by audits)

***

## Getting Started as a Matcher

<Steps>
  <Step title="Connect Wallet">
    Connect your EVM wallet and switch to Base network.
  </Step>

  <Step title="Deposit Funds">
    Deposit USDC to your matching balance via the Match page.
  </Step>

  <Step title="Review Trade Queue">
    Browse pending trades waiting for liquidity.
  </Step>

  <Step title="Select and Match">
    Choose trades to match based on your risk preferences.
  </Step>

  <Step title="Earn Interest">
    Collect interest while positions are active.
  </Step>

  <Step title="Receive Settlement">
    Get your funds back (± P\&L) when trades close.
  </Step>
</Steps>

***

## Matching Strategies

<AccordionGroup>
  <Accordion title="Conservative Matching">
    * Match only low-leverage trades (2-5x) - Prefer trades with tight
      stop-losses - Balance longs and shorts - Accept lower yields for lower risk
  </Accordion>

  <Accordion title="Yield Optimization">
    * Match higher-leverage trades for more interest - Focus on
      frequently-traded pairs - Monitor and exit if exposure gets too large -
      Requires active management
  </Accordion>

  <Accordion title="Market Making">
    * Match both sides of the market - Profit from interest while staying
      delta-neutral - Requires sufficient capital to match diverse trades - Most
      sophisticated approach
  </Accordion>
</AccordionGroup>

***

## Key Metrics

### APR (Annual Percentage Rate)

Estimated yearly return from interest if funds remain matched:

```
APR = Hourly Rate × 24 × 365
```

Typical APRs range from **10-30%** depending on market conditions and utilization.

### Utilization Rate

Percentage of your deposited funds currently matched:

```
Utilization = Matched Funds / Total Deposited
```

Higher utilization = more interest earned, but less flexibility to withdraw.

### Net Exposure

Your overall directional exposure across all matched positions:

```
Net Exposure = Long Exposure - Short Exposure
```

A net exposure of 0 means you're delta-neutral.

***

## Matching Interface

The Match page shows:

| Section       | Information                                             |
| ------------- | ------------------------------------------------------- |
| Your Balance  | Deposited amount, matched amount, available to withdraw |
| Trade Queue   | Pending trades waiting for liquidity                    |
| Your Matches  | Active positions you've matched                         |
| Match History | Completed matches with P\&L                             |

### Filtering Trades

Filter the trade queue by:

* Trading pair
* Position size range
* Leverage range
* Direction (long/short)
* Estimated APR

***

## Comparison: Matching vs. Other DeFi Yields

| Strategy            | Typical APY | Risk Level  | Capital Efficiency |
| ------------------- | ----------- | ----------- | ------------------ |
| **Limora Matching** | 10-30%      | Medium-High | High               |
| Aave Lending        | 2-5%        | Low         | Medium             |
| Uniswap LP          | 5-20%       | Medium      | Medium             |
| Staking             | 3-8%        | Low         | Low                |

***

## Best Practices

<AccordionGroup>
  <Accordion title="Diversify matches">
    Don't concentrate all funds in one trade. Spread across multiple positions
    to reduce single-trade risk.
  </Accordion>

  <Accordion title="Monitor exposure">
    Regularly check your net long/short exposure. Imbalanced exposure means
    you're betting on market direction.
  </Accordion>

  <Accordion title="Understand the trader">
    Higher leverage trades earn more interest but have larger potential P\&L
    swings.
  </Accordion>

  <Accordion title="Keep reserves">
    Don't match 100% of your funds. Keep some available for opportunities or
    withdrawals.
  </Accordion>
</AccordionGroup>

***

## Next Steps

<CardGroup cols={2}>
  <Card title="Depositing" icon="arrow-down" href="/lending/depositing">
    Learn how to deposit funds for matching.
  </Card>

  <Card title="Withdrawing" icon="arrow-up" href="/lending/withdrawing">
    Understand withdrawal mechanics.
  </Card>

  <Card title="Interest" icon="percent" href="/lending/interest">
    Deep dive into interest calculations.
  </Card>

  <Card title="Fees" icon="receipt" href="/trading/fees">
    Review fee structure.
  </Card>
</CardGroup>