Ever since I got introduced to the idea of "soft liquidations" via @CurveFinance's LLAMMA tech I've been intrigued about the concept of "re-balancing" leveraged positions to avoid or greatly reduce the potential for hard liquidations. As an active trader, this is something that I can see tremendous value in if it is done correctly. The only two protocols in the space (from my understanding) that offer something like this are @CurveFinance and @protocol_fx. Suffice it to say it's a fairly new/novel concept and most are still trying to wrap their head around the idea of it. I previously tested @protocol_fx and their V1 iteration and it worked just as expected. However max leverage was around 1.3-1.7x when I tested it and using the protocol would have triggered a taxable event, as your collateral was swapped for a wrapped token in the process of entering and exiting positions. Since then the @protocol_fx team has introduced a new iteration of their product, which they call V2. This iteration allows for up to 7x leverage, with an auto-rebalancing mechanism (different from Curve's mentioned above) that is supposed to reduce the probability of a hard liquidation on a leveraged long in the event of a market downturn. It also doesn't "swap" your collateral tokens which means entering and exiting positions should NOT trigger a taxable event on your collateral (only on gains/losses from the position, from my understanding). I've been chatting with the team for some time now (back when I was testing their V1 product) but they recently reached out to me again to stress test their new V2 product and sent me some ETH to do so. I'll be documenting it here as I think there is a market for a product like this in the space right now as an alternative to the current standard of hard-liquidation levered longs. For the sake of this "experiment" I immediately longed the ETH received at market and at max leverage allowed by the system (7x) as the intention is to force a "re-balancing" by the system which will occur at 1863. It's also worth noting that for every "re-balancing" event their is a 2.5% fee charged. Depending on how frequently a re-balancing is needed, I feel that this cost could add up quite significantly. On a typical leveraged long, hard liquidation for this position at 7x leverage would occur with around a 15% drawdown, or a price of ~1615. The position is already down a bit and the first re-balancing event will occur with another 1.2% of drawdown on ETH. Will update this post as PA develops.