Yield-looping

Raga Finance’s Yield-looping Vaults utilise leverage to allow the users to double down on their favourite strategies. This allows users to earn 2-3 times more on their favourite strategies, while controlling their own risk vs reward tradeoffs.

How It Works

The yield-looping strategy takes advantage of the difference between the yield generated through a DeFi protocol and the cost of borrowing the input asset.

For example, the most popular is a leveraged liquid staking strategy. Assume that liquid staking ETH through Lido has a staking return of 4%. Also, you can borrow ETH on Aave at 2%. Then, if you just stake ETH on Lido, you earn 4%. Instead, if you use the wstETH (Lido-staked ETH) as collateral to borrow more ETH and stake, you earn an extra 2% (4%-2%) return. The higher the leverage, the larger the earnings. In this case, for a 3x leverage, the returns generated become 8% against a base return of 4%, doubling the returns.

Summary:

• Hold wstETH, return = 4%

• Leverage liquid stake at 2x leverage, earn 2*4% = 8%, pay interest = 2%, net return = 6%

User Benefits

• Increased returns: Higher returns by doubling down on strategies that you believe in

• Simplified strategies: Raga abstracts out the complexities and allows the user to single click open and close their positions

• Transparent: User has complete control of their assets, and can visualise the risk reward curve through simplified parameters shown by Raga

Supported Networks

Raga Finance will soon go live with its first yield-looping vaults in partnership with Spectra and Hemi. You can get yourself whitelisted and read more about the vaults here