# Leverage

Leverage boosts potential profits by multiplying returns on investments but is only applicable for trades using Long OPerps tokens. Unlike traditional trading platforms where users select their leverage, in OPerps, **leverage is automatically determined by the supply of Long and Short OPerps tokens in their respective pools.**

Leverage is calculated by comparing the sizes of the Short OPerps and Long OPerps token pools each cycle.&#x20;

*Leverage = (Supply of Short Operps Tokens)/(Supply of Long Operps Tokens)*

More Short Tokens result in higher leverage for Long Token holders, while more Long Tokens reduce leverage but provide higher premiums for Short Token holders.&#x20;

**Higher premiums attract more players to hold Short OPerps tokens to receive the premium each cycle, which in turn increases leverage.**

One thing to note is that leverage is calculated based on the ratio of Short OPerps to Long OPerps. Holders of Long OPerps pay a predefined premium at each settlement, which is then divided among the Short OPerps holders.

For example, if Long OPerps holders pay a 50% premium, and there are 100 times as many Short OPerps holders, each Short OPerps holder would earn 0.5% of that premium.[<br>](https://ethosx.gitbook.io/operps/settlement)
