DeFi

Can we stop saying "looping" and start saying leverage? Bc that's exactly what's happening

now /backpack • building @so many products • prev. @everyname (acq) @nethermind @proximacapital @consensysacad • thomphreys.com

"Looping involves lending some capital (e.g. ETH on Aave), borrowing another currency (e.g. DAI) against it, swapping the borrowed amount for the original asset (ETH), and repeating the steps through several loops to gain more exposure to the initial asset (or farming rewards)." 

gain more exposure = leverage

looping (on a money market) means something specific tho and is different than other types of leverage like perpetual swaps

By increasing your APR through "looping", you also increase your leverage. hence, looping = leveraging.

"looping" could also be farming a lending protocol where the borrow/lending incentives outweigh the borrow rate. Still possible on some protocols basically lending and borrowing the same asset