Auto-Buy allows you to reduce your vault’s collateralization ratio by generating more DAI which is swapped for collateral and deposited into your vault.
This may be beneficial in a bull market where the value of your collateral is increasing. For example, you might want to keep your collateralization ratio below a certain amount. Whenever that trigger is hit, you can generate more DAI and swap it for collateral. This gives you increased exposure to the collateral asset.
To configure your Auto-Buy, you have to determine:
This is the collateralization ratio that, when hit, will trigger the execution of your Auto-Buy. The ratio is calculated with the next oracle price.
This is the collateralization ratio that is going to be achieved by executing the Auto-Buy. For Auto-Buy, the Target Ratio is always lower than the Trigger Ratio.
Note: the Auto-Buy will be eligible for execution if it can achieve the Target Ratio +/- 2%.
Max Buy Price
When you execute an Auto-Buy you generate Dai to buy collateral, which is deposited into your vault. Here you are setting the maximum price that you are willing to pay for that collateral. Note that the price paid for the collateral is the current trading price on 1inch DEX, so it will very likely be different from the current and next oracle prices.
Max Gas Fee
Here you select the maximum gas fee that you are willing to spend each time your Auto-Buy executes. If the gas fee is above your max gas fee, the Auto-Buy will remain active but will not execute until the network gas fees reduce.
WARNING: please note that this is a recursive strategy, every time your trigger is hit, the Auto-Buy will execute. This means that the trigger remains in place even after the execution. If you do not wish to continue with the Auto-Buy execution, you must cancel it.
You can watch a step-by-step tutorial to set up an Auto-Buy strategy in the video below: