# 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](https://www.spectra.finance/) and [Hemi](https://hemi.xyz/). You can get yourself whitelisted and read more about the vaults [here](https://docs.raga.finance/hemi)