A Zoom on DeFi Saver's Loan Shifter: the ultimate feature for managing your loans in DeFi

Introduction

In the crypto ecosystem, and DeFi in particular, taking out loans has become increasingly common. Lending protocols like Aave or Morpho provide a relatively simple way to leverage investments or access liquidity without selling one’s assets.

However, this accessibility also comes with risks and uncertainties. One of the biggest challenges is interest rate volatility. Unlike traditional loans with fixed rates, DeFi loans are subject to rapid fluctuations based on capital supply and demand in each protocol. If rates suddenly spike, a profitable position can quickly become a financial burden.

Another critical factor is protocol security. Even the most reputable platforms can be exposed to vulnerabilities or hacks. In the event of an incident, it is often necessary to react quickly to protect funds, whether by changing the collateral or reducing market exposure.

In such scenarios, users usually have to manually close a position and open a new one — involving multiple transactions across various dApps. This process is time-consuming and costly, and exposes users to slippage or liquidation risk during execution. It also increases the chances of mistakes made under pressure.

That’s exactly where the Loan Shifter comes in — a tool designed to simplify these adjustments by executing complex operations on DeFi loans with just a few clicks.

→ Check out our full introduction to DeFi Saver:

DeFi Saver: The All-in-One Interface for DeFi Management

DeFi Saver is an all-in-one interface for efficiently managing DeFi positions. It integrates numerous popular protocols like Aave, Sky (MakerDAO), and Morpho, while providing additional features that further expand the possibilities offered by native lending protocols.

---

How the Loan Shifter works

The Loan Shifter is a feature built by DeFi Saver that lets users modify a loan position without manually closing it. In simple terms, this means you can switch your collateral or transfer your debt to another protocol in a single transaction — without repaying the loan or liquidating the position.

Behind this simple interface lies a technically complex mechanism made possible by flash loans. Flash loans are uncollateralized loans that must be repaid within the same block they are issued. They are often used to arbitrage markets without needing upfront capital.

In the case of the Loan Shifter, flash loans are used to temporarily borrow the necessary funds to repay a debt or move a collateral, while simultaneously reconstructing the position on a new protocol or with a new asset.

Example: A user wants to replace their ETH collateral with WBTC. Without the Loan Shifter, they would need to repay the loan, withdraw ETH, swap it, deposit WBTC as new collateral, and borrow again. With the Loan Shifter, all of these steps are bundled into one transaction.

This single transaction is made possible by a flash loan, which provides the necessary temporary liquidity, and by the use of a smart wallet.

A smart wallet is a non-custodial crypto wallet based on a smart contract, which adds programmability. This allows for advanced functions like custom security or executing complex transactions in one operation — things a traditional wallet can’t do.

DeFi Saver has optimized this process to be gas-efficient through direct integration with multiple protocols. By avoiding multiple transactions, it significantly reduces costs (especially during high network congestion) and shortens execution time while minimizing price movement risks between steps.

The Loan Shifter has two main functionalities: transfers on the same protocol (Collateral Swap and Debt Swap) and Protocol Shift:

• The collateral swap enables you to replace the collateral asset on the same protocol, thus changing its exposure to the market.
• The debt swap allows you to change the asset borrowed on the same protocol, which can be useful for taking advantage of more advantageous interest rates on other stablecoins without having to manually repay the initial loan.
• A protocol shift simply moves a position from one protocol to another, without modifying the collateral or debt, but also combine everything: move a position from one protocol to another by modifying the collateral or the asset in debt.

The Loan Shifter currently supports most major lending and CDP platforms including: Aave, Morpho Optimizer, Morpho, Compound, Spark, Liquity, Reflexer, Maker, Curve, Llama Lend, and Fluid.

For asset swaps, the Loan Shifter aggregates routes through Uniswap v2 and v3, Sushiswap, and Kyberswap. The most optimized route is selected by default, but users can manually override it and set slippage limits.

Explore DeFi Saver – the go-to tool for DeFi power users

---

Use Cases for the Loan Shifter

One of the main advantages of the Loan Shifter is its flexibility. It allows users to adapt quickly to market conditions, optimize their borrowing costs, or respond to critical events. Below are some of the most relevant use cases enabled by this feature.

Switching protocols to get better rates

Let’s say a user has borrowed USDS on Aave, but notices that Spark offers a much lower interest rate for the same loan. Manually closing the position on Aave and opening a new one on Spark would require multiple transactions, time, fees, and would expose the user to slippage or temporary market risk.

With the Loan Shifter, this migration can be executed in a single transaction. The tool uses a flash loan to repay the debt on Aave, withdraw the collateral, deposit it on Spark, and re-borrow USDS. In one seamless operation, the user significantly reduces their future borrowing costs.

Changing collateral to adjust market exposure

Now imagine a user has borrowed USDC with ETH as collateral. They anticipate that ETH might decline in the coming weeks and want to protect themselves from potential liquidation. At the same time, they’re confident that BTC will be more resilient during this period.

Using the Loan Shifter, the user can easily replace their ETH collateral with WBTC, adjusting their exposure without having to close the loan, perform the asset swap, and reopen the position manually.

This kind of collateral swap is especially useful during periods of high volatility, or when users want to realign their strategy without disrupting how the borrowed capital is currently deployed.

Other notable use cases

The Loan Shifter is a versatile tool with many additional applications, such as:

• Quick exits during hacks or exploits: If a protocol is compromised or a vulnerability is discovered, the Loan Shifter allows users to quickly migrate their position to a safer protocol. Speed here can be critical to protecting funds.
• Chasing higher yields: If another protocol offers better returns on a different asset, the Loan Shifter enables users to shift both collateral and protocol in one transaction, making it easier to capitalize on opportunities.
• Consolidating debts: For users with debts across multiple platforms, the Loan Shifter can help consolidate them into a single position on one protocol with unified collateral — simplifying portfolio management and reducing borrowing costs.

In short, the Loan Shifter is a powerful, flexible tool for DeFi users. Whether the goal is to maximize returns, manage risks, or streamline daily operations, this feature offers an elegant and efficient solution.

---

Conclusion

In a DeFi landscape defined by volatile rates and ever-present risks of hacks or liquidations, being able to adjust one’s loan positions quickly and efficiently is essential. DeFi Saver’s Loan Shifter answers this need by enabling collateral swaps, debt swaps, and protocol migrations in a single transaction — eliminating the friction and complexity of manual operations.

Thanks to flash loans and optimized execution, it offers unmatched flexibility, while also reducing gas costs and minimizing risks. The Loan Shifter stands out as a smart, practical solution that significantly enhances the DeFi experience.

Explore DeFi Saver – the go-to tool for DeFi power users