Oct 17 • Strategy
Reducing SUI exposure on NAVI without losing leverage
Hey everyone,
I’ve got a NAVI position with SUI as collateral (yep… about one-third got liquidated last Friday 😅).
Earlier this week I spoke with David — he mentioned he moved his whole lend/borrow setup on Aave fully into cash.
He also gave an example where he borrowed ETH on the borrow side and looped it back into supply to reduce his long ETH deltas.
That got me thinking about my own position.
I also want to reduce my deltas (SUI exposure) without losing leverage.
The tricky part is that NAVI doesn’t have a swap feature on either the collateral or borrow side like Aave does.
So if you want to derisk, you have to withdraw → swap → redeposit in smaller steps to keep your health factor stable.
Then I thought: instead of looping or borrowing more, what if I just sell part of my SUI collateral for USDC and deposit that USDC as new collateral?
That should also reduce my deltas, but with less risk.
Below I’ve outlined the main approaches I considered 👇
⚙️ Base setup
SUI = $2.50
Collateral = 1,000 SUI ($2,500)
Borrow = $1,000 USDC
Starting health factor ≈ 1.5
Starting net worth = $1,500
Now let’s see what happens if SUI goes to $1.50 (bearish) or $3.50 (bullish).
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🅰️ Option A – Collateral swap (sell SUI → deposit USDC)
You sell 400 SUI ($1,000) and deposit that USDC as collateral.
So now you hold 600 SUI ($1,500) + $1,000 USDC = $2,500 total collateral.
Borrow stays $1,000 USDC.
📉 If SUI → $1.50
– Collateral ≈ $1,900
– Net worth ≈ $900 (so − $600 vs start)
– HF ≈ 1.6 (safer)
📈 If SUI → $3.50
– Collateral ≈ $3,100
– Net worth ≈ $2,100 (+ $600 gain)
– HF ≈ 1.8 (still very safe)
✅ Pros
– Raises HF and lowers risk
– No extra debt or interest
– You can later rebuy more SUI if it drops
⚠️ Cons
– You give up part of the upside if SUI pumps
– Manual rebuy required
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🅱️ Option B – Borrow hedge (borrow SUI → sell for USDC)
You keep your 1,000 SUI collateral but borrow 400 SUI ($1,000) and sell it for USDC.
You now owe $1,000 USDC + 400 SUI.
HF ≈ 1.3 (start).
📉 If SUI → $1.50
– SUI debt value drops to $600
– Net worth ≈ $900 (− $600 vs start)
– HF ≈ 1.45
📈 If SUI → $3.50
– SUI debt value rises to $1,400
– Net worth ≈ $2,100 (+ $600 gain)
– HF ≈ 1.2 (riskier)
✅ Pros
– Works like a partial short
– Automatically profits if SUI drops
– Keeps leverage intact
⚠️ Cons
– Lower HF, higher liquidation risk
– Borrow interest on SUI
– More complex to manage
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🅾️ Option C – Borrow SUI → sell for USDC → deposit that USDC as collateral
Same as B, but instead of keeping the USDC in your wallet, you add it as new collateral.
You still owe 400 SUI, but now your collateral mix is SUI + USDC ≈ $3,500 total.
HF ≈ 1.4 at start.
📉 If SUI → $1.50
– Collateral ≈ $2,500
– Debt ≈ $1,600
– Net worth ≈ $900 (− $600 vs start)
– HF ≈ 1.6
📈 If SUI → $3.50
– Collateral ≈ $4,500
– Debt ≈ $2,400
– Net worth ≈ $2,100 (+ $600 gain)
– HF ≈ 1.3
✅ Pros
– Balanced hedge: lower delta, still solid HF
– Gains on a SUI drop, less liquidation risk than B
⚠️ Cons
– Borrow interest still applies
– Slightly more complex to track
----------------------
📊 Summary (absolute P/L vs doing nothing)
⚖️ If SUI drops from $2.50 → $1.50
Do nothing
– Net worth ≈ $500 (−$1,000 loss)
– HF ≈ 1.1 → almost liquidated
Option A – Collateral swap
– Net worth ≈ $900 (−$600 loss)
– HF ≈ 1.6 → safe
Option B – Borrow hedge (borrow SUI → sell for USDC)
– Net worth ≈ $900 (−$600 loss)
– HF ≈ 1.45 → moderately safe
Option C – Borrow SUI → sell → deposit USDC as collateral
– Net worth ≈ $900 (−$600 loss)
– HF ≈ 1.6 → safe
📈 If SUI rises from $2.50 → $3.50
Do nothing
– Net worth ≈ $2,500 (+$1,000 gain)
– HF ≈ 2.6 → very safe
Option A – Collateral swap
– Net worth ≈ $2,100 (+$600 gain)
– HF ≈ 1.8 → safer, less upside
Option B – Borrow hedge
– Net worth ≈ $2,100 (+$600 gain)
– HF ≈ 1.2 → risky
Option C – Borrow SUI → sell → deposit USDC
– Net worth ≈ $2,100 (+$600 gain)
– HF ≈ 1.3 → slightly risky
💡 Takeaway
All three options flatten your delta curve — you lose less when SUI drops and gain less when it pumps.
But your risk profile changes:
🔹 Option A – safest, no new debt, higher HF.
🔹 Option B – same P/L range but lower HF and interest cost.
🔹 Option C – balanced hedge; keeps leverage, smoother HF.
Personally, I’m leaning toward A since that reduces SUI exposure without killing leverage or risking liquidation. So why would you ever choose option
Curious what you all think — am I missing something here?
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Reducing SUI exposure on NAVI without losing leverage
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