# Leverage Looping 101

By [LayerBank](https://paragraph.com/@layerbank) · 2025-07-30

---

### _How to Stack Yield on Any Collateral—Stable or Volatile—with One Click_

LayerBank lets you maximize your yield potential by looping any supported collateral—whether stable or volatile—in just a few clicks. Backed by robust audits and oracles, our Leverage Looping feature makes sophisticated DeFi strategies simple and safe.

### 1\. Getting Started – Deposit & Loop

### Select Collateral

Choose from supported tokens including stables, LSTs, yield-bearing vault tokens, or RWA-backed assets. LayerBank supports both native and derivative tokens (e.g., USDC, pUSD, nAsset, ETH, LSTs, etc).

![](https://storage.googleapis.com/papyrus_images/a9a48a73b82d25ef678637dc686215e18e82241fa92b1f8e8ec93c24044fbb2a.png)

### Choose Loop Settings

Set your desired leverage level. The higher the loop multiplier, the higher the potential yield—and the higher the risk. LayerBank displays the estimated Net APY and position metrics for each loop configuration.

![](https://storage.googleapis.com/papyrus_images/6d7034cdde1717443ba87875282a710502164ead951120feb3b87fe6ddd19260.png)

### One-Click Loop

With a single transaction, LayerBank automates the process of borrowing, minting/swapping, and re-depositing—repeating until your target LTV is reached.

* * *

2\. Earning Yield – How the Math Works
--------------------------------------

### Net APY

Your **Net APY** =`(Base yield of the collateral − Borrow APR) × Leverage multiplier`

Example:If nAsset yields 10% and borrow rate is 2%, then:→ Spread = 8%→ At 3× leverage: Net APY = ~24%

> ⚠️ **Note:** Net APY is calculated based on the total looped position. This may appear lower than theoretical yield projections due to effective compounding dilution across the position.

### Real-Time Position Tracking

You can monitor your growing position value in real-time, with detailed stats on collateral balance, debt, Net APY, and liquidation buffer.

3\. Strategy Types – Correlated vs. Volatile
--------------------------------------------

### 🟢 Stable Loops (Stable-on-Stable)

These strategies involve borrowing and re-depositing correlated or pegged assets (e.g., pUSD → nAsset on Plume).

*   **No liquidation risk** from price swings
    
*   **Ideal for predictable, low-risk yield stacking**
    
*   **No slippage** when using mint-based looping (e.g., [Nest Vault](https://app.nest.credit/))
    

> ✅ Great for users who prefer consistent returns without price exposure.

* * *

### 🔴 Volatile Loops (Token-on-Token)

These involve leveraging price-exposed assets like ETH, BTC, or LP tokens.

*   **Higher upside** potential
    
*   **But risk of liquidation** if the collateral price falls
    
*   Best for experienced users who can monitor LTV and price volatility
    

4\. Mint vs. Swap – Two Ways to Loop
------------------------------------

### ✅ Mint Path

*   Borrow a stablecoin (e.g., pUSD)
    
*   **Mint more collateral** via LayerBank’s mint integrations (e.g., Nest Vault)
    
*   Zero slippage, and often cheaper than swaps
    

> Example: pUSD → Mint nAsset directly via Nest Vault

### 🔄 Swap Path

*   Borrow → Swap stablecoin for collateral via a DEX
    
*   Useful when minting is unavailable or capped
    
*   **Slippage applies**, especially in volatile or thinly liquid pairs
    

Both methods result in the same looped outcome: a larger productive position generating amplified yield.

5\. How to Unwind Your Loop
---------------------------

### 🏃 Fast Exit

*   Repay the borrowed amount in full
    
*   Instantly unlock and withdraw your entire collateral
    

### 🐢 Gradual Exit

*   Withdraw partial collateral
    
*   Redeem (or unstake) it for stablecoins (some vaults may have a cooldown period, e.g., 7–14 days)
    
*   Use redeemed stables to repay part of the debt
    
*   Repeat the cycle until fully closed
    

> Plan ahead—looped positions, especially in vaults with redemption windows, may require multiple steps to unwind.

### Ready to Loop?

**Visit** [**app.layerbank.finance**](https://app.layerbank.finance/earn), pick your vault, and start stacking yield—layer by layer.

---

*Originally published on [LayerBank](https://paragraph.com/@layerbank/leverage-looping-101)*