Part 4/7:
To navigate these risks, here are four strategies that can help maintain a healthy LTV and avoid liquidation.
Strategy 1: Pay Down the Loan
One way to lower your LTV is by using rewards earned from your liquidity pools. By accumulating rewards and then using them to pay down your borrowed stablecoins, you reduce your overall liability and thus decrease your LTV.
Strategy 2: Augment the Lent Position
Another approach is to add more to your lent ETH position. When you lend additional ETH or claim rewards from liquidity pools and reinvest them into your collateral, you effectively increase your asset base, reducing your LTV in the process.