Signal Combinations

Individual signals are useful, but some of the most actionable intelligence comes from combinations. When multiple signals fire together, the combined pattern can indicate a specific market regime that is directly relevant to a leveraged DeFi position.

These combinations are not automated alerts — they are interpretive frameworks for understanding your position risk in the context of market structure.

Short Squeeze Setup

Signals: Funding Rate below P5 + Open Interest elevated

When funding is deeply negative (shorts are paying longs) and OI is high, a large short position is in the market. If the asset price rises, forced short covering can produce rapid upward price movement.

Relevance to your position: If you are short via borrowing (e.g. borrowing ETH to sell), this combination suggests elevated squeeze risk. Your borrow cost may also increase if the squeeze drives utilization up.

What to check: Health factor headroom if the asset rises 20–30%. Use the Simulator price change scenario.

Risk-Off Alert

Signals: Health Factor < 1.4 + Funding Rate above P95 + FOMC event within 48h + DXY rising

This combination indicates systemic risk — a combination of your own position fragility and macro headwinds. Elevated funding means the market is positioned long, macro catalysts are near, and USD strength is negative for crypto.

Relevance to your position: A sudden de-risking event (CPI print, Fed surprise, geopolitical shock) that causes funding rates to normalise rapidly could trigger cascade liquidations that affect price.

What to check: Run a -20% price scenario in the Simulator. If your health factor would drop below 1.1, consider partial repayment.

Accumulation Window

Signals: Recent mass liquidation event + Funding Rate normalised + Exchange net outflows elevated + Fear & Greed below 25

Following a large liquidation cascade, when the market has flushed out leverage, funding is neutral, and sentiment is at fear extremes, historical patterns suggest this is a lower-risk window to increase collateral or reduce debt cost.

Relevance to your position: If you survived a liquidation event with health factor intact, this combination suggests reduced near-term liquidation risk from further cascade events. Borrow costs may be temporarily elevated.

What to check: Current borrow rates via get_market_data. Consider whether locking in a fixed-rate position (where available) makes sense.

Protocol Stress

Signals: Utilization > 90% on a reserve + Liquidity falling + Borrow rate spiking

When a reserve is nearly fully utilized, borrow rates increase steeply and withdrawal liquidity can become constrained. Large lenders may withdraw, pushing utilization higher — a self-reinforcing dynamic.

Relevance to your position: If you are supplying the affected asset, your withdrawal may be partially delayed by low liquidity. If you are borrowing it, your borrow rate is rising and may spike further.

What to check: Reserve details via get_reserve_details. Check available liquidity vs your debt size. If your borrow rate exceeds your supply APY meaningfully, consider switching to a lower-utilization asset.