Leveraged Strategies (Looping)
What is leveraged strategies (looping)?
Looping is a structured way to amplify yield on stable, fundamentally backed assets. The mechanic is straightforward:
Deposit a yield-bearing asset (e.g., syrupUSDT earning ~3.6%) as collateral on a lending platform
Borrow against it in a correlated stable asset (e.g., USDT) at a lower rate (e.g., ~3.1%)
Use the borrowed funds to buy more of the yield-bearing asset
Re-deposit and repeat — building up a leveraged position
The result: you capture the spread between collateral yield and borrow cost, multiplied by leverage. At ~10x leverage on a ~0.5% spread, this generates roughly ~8% additional yield on top of the base rate.
Why it's safe in Yuzu's hands
Yuzu only loops on assets backed by institutional-grade collateral (BTC, ETH, T-bills, blue-chip lending) with fundamental oracles. The position is only "liquidatable" if the strategy carries negative spread for a prolonged period — which is monitored daily and unwound long before any forced liquidation could occur.
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