Yield-looping Vaults

What is Raga doing on Hemi Network?

With the growth of DeFi, yield trading enabled by Spectra and Pendle has become a go-to way for users to hedge their DeFi yield expectations. This has created PT-assets, a fixed yield product that generates a defined yield if held to maturity. More details here

Raga is working with the Spectra team to maximise returns on the PT assets through a yield-looping strategy. The basic premise is that the fixed yield on PT-assets on Spectra is higher than the borrowing rates for these assets, creating an arbitrage opportunity. Raga can use the PT-assets as collateral to borrow the base asset, and earn more PT-assets, earning the differential. This can be looped over multiple times to maximise the user returns.

For example, bfBTC on Hemi is a yield-bearing BTC derivative with an ongoing PT-asset pool offering a fixed 6% return till Sep 25, 2025. The borrowing rate of BTC on Ajna (a borrowing/lending protocol) as of today is 2.5%. Here is how the strategy goes -

1. Deposit BTC into bfBTC Spectra pool on Hemi to get fixed yield PT-bfBTC (earns 6%)

2. Use PT-bfBTC as collateral on Ajna to borrow BTC (pay 2.5% interest rate)

3. Deposit borrowed BTC into bfBTC Spectra pool on Hemi to get more fixed yield PT-bfBTC (earns 6%)

4. Repeat the loop to reach a target leverage

For each loop, the user earns an additional 3.5% (6% yield - 2.5% interest rate). At 3x leverage, the users generate 13% returns instead of the base 6%, more than doubling the returns.

Yield-looping vaults on Hemi are undergoing audits and will go live soon