What Is Recursive Borrowing?
Recursive borrowing amplifies lending yields by repeatedly borrowing and redepositing. Deposit collateral, borrow, redeposit, repeat. Multiply yield exposure. Yields 10-30% APY on base lending rates.
Deposit USDC, borrow USDC at lower rate, redeposit borrowed USDC. Repeat to target leverage. Profit from spread between supply and borrow rates plus incentives.
Liquidation risk if rates invert or collateral devalues. Gas costs for loops. Rate spread can compress. Health factor requires monitoring.
Manage loops with Fensory.