Aight aight, my bad. Let me explain this so everyone understands.
Let’s start from the top.
Why hold $S when your $S could earn yield?
People want their $S to work, and right now, $stS is the simplest way to do that.
It pays 4.13% just by holding it. No complex smart contracts, no additional exposure, just native $S yield.
But what if 4.13% ain’t cutting it?
You’ve got two typical paths:
1) Pair $stS with another token in an LP (and take on LP risk + impermanent loss).
2) Chase juiced yields from new, unproven protocols inflated by emissions.
Not ideal. Especially for capital allocators managing $100M+, they want something efficient, scalable, and clean.
Enter @aave. The most battle-tested protocol in DeFi.
With $stS listed, it unlocks a way to optimise your $S yield with a trusted, low-risk foundation.
Here’s the basic play,
> Supply $stS as collateral on Aave
> Borrow against it.
Cool, but how does that increase your $stS yield?
Looping.
Looping = leveraging exposure to a specific asset.
Let’s walk through a simple example most degens know, a classic long position.
> supply $S on Aave
> borrow $USDC
> swap $USDC back to $S
> supply that $S again
> repeat
You’re now leveraged long on $S, your exposure increases with each loop. If $S goes up, your gains are amplified.
But with Liquid Staking Tokens (LSTs) like $stS, the looping strategy doesn't leverage price exposure; it leverages yield exposure.
Here’s how,
> supply $stS
> borrow $S
> swap $S to $stS
> supply more $stS
> repeat
Now remember, you’re borrowing against an asset that’s already earning 4.13% yield.
Unlike the $S/$USDC loop, this isn’t about catching a price swing. Because $stS tracks the price of $S + yield, you’re stacking exposure to yield while neutral on price.
Let’s say you have $10,000 in $stS, that’s $413/year in yield. Loop it to 10x exposure, you’re now earning $4,130/year.
So… is it free money?
Not exactly.
Your loop is only profitable if the borrow rate on $S is less than the yield on $stS. Right now, that means borrowing has to cost you less than 4.13%.
This proposal?
It optimizes the $stS Aave market to make that loop easier and more efficient.
> tuning parameters to reduce friction
> Incentivising with $wS rewards
> recycling $stS collector revenue back into the loop
TLDR: It aims to make that loop profitable for the next 6 months to offer the best return on $S yield generation with no exposure besides $stS, $S and @aave.
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