Multiply your yield by recursively borrowing and depositing. Understand looping strategies and risks.
yieldIntermediate30-45 minutes7 stepsPrerequisites: Understanding of lending protocols, Assets to deposit, Awareness of liquidation risk
On this page
Quick Overview
1Understand the Math
2Choose Protocol
3Initial Deposit
4Borrow Against Collateral
5Redeposit Borrowed Funds
6Repeat as Desired
7Monitor Closely
Looping is a DeFi strategy where you deposit, borrow, and redeposit the same asset multiple times. This multiplies your exposure to lending yields and rewards.
How Looping Works
Deposit ETH as collateral
Borrow ETH against it (e.g., 80%)
Deposit borrowed ETH
Repeat until desired leverage
Example with 80% LTV:
Loop
Deposited
Borrowed
Net Exposure
. . .
. . . . . -
. . . . .
. . . . . . .
1
1 ETH
0.8 ETH
1.8 ETH
2
1.8 ETH
1.44 ETH
2.44 ETH
3
2.44 ETH
1.95 ETH
2.95 ETH
Risk Factors
Liquidation if rates change
Interest rate volatility
Smart contract risk
Gas costs to unwind
. -
Monitor your looped positions with Fensory. Track leverage and health.
Start Tracking →
Step-by-Step Instructions
1
Understand the Math
Calculate potential leverage and break-even rates before starting.
Tips
✓Max leverage = 1 / (1 - LTV)
✓80% LTV = max 5x exposure
✓Supply APY must exceed borrow APY
2
Choose Protocol
Aave, Compound, or specialized looping protocols. Check rates first.
Tips
✓Same-asset borrowing best for looping
✓E-Mode increases possible leverage
3
Initial Deposit
Deposit your base asset. This becomes your collateral.
Tips
✓Start with amount you can afford to lose
✓Gas costs add up with multiple loops
4
Borrow Against Collateral
Borrow the same asset up to a safe LTV (leave buffer for rates).
Warnings
⚠Do not max out LTV
⚠Keep health factor above 1.3 minimum
5
Redeposit Borrowed Funds
Deposit the borrowed amount as additional collateral.
Tips
✓Each loop increases exposure
✓Diminishing returns after 3-4 loops
6
Repeat as Desired
Continue looping until you reach target leverage or efficiency drops.
Tips
✓Track total exposure
✓Calculate effective APY after costs
7
Monitor Closely
Watch health factor and rate changes. Be ready to unwind if needed.