Leverage higher yield with your yield assets

TownSquare's Leveraged Yield Vaults (Loop Vaults) enable higher, super competitive yields for existing yield-bearing assets at very low risk for correlated asset pairs (e.g. PT-aprMON / MON).

The Yield Vaults are an implementation of ERC-4626 in the EVM. The asset strategy exeuction is as follows:

• Initiate Leveraged Position

  • Users deposit collateral (e.g., PT-LST of asset x) into Loop Vaults to initiate leverage.

• Borrow Liquidity

  • Loop Vaults borrow correlated assets (e.g. asset x) from the Crosschain Money Market, subject to collateral factors.

• Increase exposure

  • Use the borrowed asset to acquire more of the PT of the asset to increase yield, requiring the borrow cost be lower than the PT yield.

• Position Management & Risk Mitigation

  • Health Factor: Ensures adequate collateralization.

  • Price Oracles: Feed real-time asset prices from the fixed rate asset protocol (e.g. Pendle, RateX)

  • Liquidation: Triggered if the health factor falls below the threshold; liquidators repay debt and claim collateral with a bonus.

  • Users can add collateral or repay loans to maintain safety.

• Close Position

  • Vault unwinds strategy, repays borrowed amount plus interest, and returns remaining assets (profit/loss) to the user.