Leverage Strategies

Looping is one of the most popular strategies in DeFi, which powers a lot of TVL across chains and protocols and is DeFi leverage in its crudest form. In a nutshell, looping encompasses repeatedly using one's asset to borrow another one, then swapping that for the initial collateral to then repeat the same process all over again. Repeated n times, this gives the user n times additional exposure to an asset.

Here's how to leverage loop on Mystic:

• Head over to the "Leverage" tab.

• Find the pair you want to loop, meaning the one which has both the target asset you want to get leveraged exposure to and the asset you want to denominate your debt in (Debt Asset). Click "Deposit".

• You will now see the looping page. Here, you can select the size of your initial position (how much you're depositing) as well as your leverage multiple (the number of times you will borrow against your asset, swap it back for collateral and repeat). More leverage means yield, but also more exposure to price fluctuations. Be careful not to take a position too risky.

• Before going through with your transaction, be sure to confirm all relevant details about your position - the amount you're putting in, the total debt you're taking on and at what price will your position be at risk of liquidation.

• Once you're comfortable with those details, press "Leverage". You will have made a leveraged position.

Don't forget that, over time, your position accumulates debt. Since you have made a leveraged position, that means you are additionally exposed to fluctuations in price. In leveraged positions more than ever, it is crucial you actively manage your position and keep track of it on your dashboard.