Glossary · DeFi
Looping
Also: recursive borrowing, leveraged loop, loop
Looping is the practice of depositing collateral, borrowing against it, converting the borrowed asset back into the collateral asset and redepositing, repeating the cycle to build leveraged exposure to a yield spread.
Related terms
- Loan-to-value
- Loan-to-value, abbreviated LTV, is the ratio of borrowed value to collateral value, with each asset assigned a maximum LTV for new borrowing and a higher liquidation threshold at which the position becomes seizable.
- E-Mode
- E-Mode is a lending protocol setting that raises the maximum loan-to-value when a borrower's collateral and debt are closely correlated assets, such as two forms of staked ether, at the cost of concentrating the position in one price relationship.
- Liquidation
- Liquidation is the process in which a third party repays part of an undercollateralized borrower's debt and receives their collateral at a discount, closing the shortfall before the protocol takes a loss.
Guides that explain Looping
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