Introducing Loops - a new Baseline mechanic that allows users to increase their exposure to bTokens, effortlessly.

What is it

Looping involves repeatedly borrowing against bToken to purchase more bTokens, creating a leveraged position. When the bToken's price rises relative to the reserve asset, looped positions see amplified returns:

Unlike Baseline Loans, where users have to pay interest based on the amount borrowed, Loops use a funding rate mechanism to charge fees on looped positions. In this system, the protocol automatically "shrinks" both collateral and debt over time, allowing users to maintain non-liquidatable leveraged exposure without any active management of the position.

How do I loop?

Baseline Loops simplifies the looping process through a simple user experience:

1. Deposit reserves (ETH, USDB, etc) to Open and/or Increase Position.

2. The system automatically max loops for you.

3. Decrease and/or Close Position to un-loop collateral and return reserves.

This streamlined process unlocks benefits of a leveraged position while reducing complexity to a minimum. To learn more about Loops: https://docs.baseline.markets/utility/loops

When do I loop?

Looping tends to be most advantageous when:

1. The bToken's price is close to its BLV, offering maximum capital efficiency and lower downside risk.

2. You have a strong conviction in the bToken's short to medium-term price appreciation.

3. You understand the risks involved and have a clear exit strategy.

Remember, while looping near the BLV offers better capital efficiency, it should still be approached with caution and a thorough understanding of the potential outcomes.

Next Steps

Loops is now available for YES and (soon) MACHI. Head over to Baseline Markets to try it out: