Looping / Recursive Lending Calculator
Free DeFi looping calculator. Recursive borrow → re-deposit for amplified yield. Compute effective leverage, net APR, and liquidation distance.
Looping amplifies both yield and risk. Single liquidation can wipe out the position. Use only with stable→stable or correlated assets. Monitor health factor daily.
How to use Looping / Recursive Lending Calculator
This Looping / Recursive Lending Calculator models the DeFi strategy of depositing collateral, borrowing against it at a target LTV, re-depositing the borrowed funds, and repeating to amplify yield. From your initial deposit and the LTV per loop it sums a geometric series, total collateral = deposit × (1 − LTV^(loops+1)) / (1 − LTV), to derive effective leverage, total collateral, total borrowed, and net equity. Theoretical max leverage at any LTV is 1 / (1 − LTV), so 80% LTV caps near 5×.
The headline figure is net APR: gross supply yield (total collateral × supply APY) minus borrow cost (total borrowed × borrow APR), divided by your deposit. It also shows the yield multiplier versus a plain unleveraged supply, one-time gas across all loops (two operations per loop), and a full liquidation panel, current LTV, health factor (liquidation LTV ÷ current LTV) and the collateral drop that triggers liquidation. Compare a single-position alternative with our <a href="/leverage-calculator/">leverage calculator</a>.
Input guide and assumptions
Initial deposit (USD) seeds the loop; supply APY is what your collateral earns and borrow APR is what the debt costs, the spread between them is what makes looping profitable or a negative carry. Target LTV per loop sets how much you borrow each round (preset chips 30–80%), liquidation LTV is the protocol's danger threshold, and number of loops (0–20) controls how many times you recurse. Gas cost per loop estimates the one-time transaction expense, counted as two operations per loop.
The calculator assumes a constant LTV and flat rates across every loop, so it is a steady-state estimate, not a live position tracker. Liquidation LTV must exceed target LTV or no result is returned, and target LTV must sit between 0 and 95%. It does not model rate changes, oracle lag, or asset depeg, so use it for stable→stable or tightly correlated pairs and verify with our <a href="/liquidation-calculator/">liquidation calculator</a> before deploying capital.
Reading your loop position
Looping (recursive lending) amplifies yield by depositing → borrowing → re-depositing in a loop. Each iteration adds leverage. Theoretical max leverage = 1/(1−LTV). At 80% LTV: 1/(1-0.8) = 5x max. At 60% LTV: 2.5x. At 40%: 1.67x. Higher LTV = higher leverage but smaller liquidation buffer.
Net APR = supply_APY × leverage − borrow_APR × (leverage − 1). At supply 8%, borrow 5%, leverage 4x: net = 32% - 15% = 17% APR. Higher than simple supply (8%) but with significant liquidation risk if collateral drops 25%+ (depending on loan-to-value drift).
Loop strategy scenarios
Conservative ETH-stETH loop: deposit $10K stETH (4% APY), borrow ETH (3% APR) at 70% LTV, swap to stETH, redeposit. After 2 loops effective leverage ~2.4x. Net APR ≈ 4% × 2.4 - 3% × 1.4 = 9.6% - 4.2% = 5.4%. Modest amplification of stETH yield with manageable de-peg risk.
Aggressive ETH-USDC loop: deposit $10K ETH (3% supply), borrow USDC (8% borrow) at 75% LTV, swap to ETH, redeposit. 4 loops = 3.5x leverage. Net APR = 3% × 3.5 - 8% × 2.5 = 10.5% - 20% = -9.5% (negative carry!). Loop only profitable when borrow_APR < supply_APY, which is rare for non-correlated assets.
Risk and execution checklist
- Before looping: 1) Verify supply APY > borrow APR by comfortable margin (5%+ minimum). 2) Check liquidation LTV vs target LTV, target should be 10-20% below liquidation. 3) Calculate cost of liquidation event (penalty 5-10% of position) vs amplified yield. 4) Test with small $1K loop first to validate the workflow.
- Asset correlation matters most. ETH-stETH loop has tight correlation (rare de-peg events), safe up to 3x leverage. ETH-USDC loop requires ETH price stability, dangerous above 2x because ETH moves can liquidate before earning enough yield.
Looping mistakes that liquidate
- Looping uncorrelated assets aggressively. Borrowing ETH against BTC collateral at 4x leverage means a 20% BTC drawdown coincident with ETH rise = liquidation. The 'amplified yield' becomes amplified loss in adverse markets.
- Ignoring borrow rate volatility. Aave/Compound rates spike during high utilization (sometimes 30%+ APR briefly). A loop profitable at 5% borrow becomes ruinous at 25% borrow. Set alerts for rate changes and have a deleveraging plan ready.
Loop profitability benchmarks
Typical looping setups (May 2026): stETH-ETH loop 2-3x → 5-8% net APR (low risk), ETH-USDC loop 2x → -5% to +5% APR (rate-dependent), BTC-USDC loop 2x → -3% to +7% APR. Higher leverage requires constant monitoring or automation (DeFi automation tools like DeFi Saver).
Liquidation distance benchmarks: 4x leverage = liquidation if collateral drops ~22%, 3x = ~30%, 2x = ~45%. ETH 30-day historical max drawdown often 15-25% — 4x leverage on ETH-USDC is statistically borderline.
Execution templates you can reuse
Recursive workflow: 1) Deposit collateral on Aave/Compound. 2) Borrow at target LTV (e.g., 75% of collateral value). 3) Swap borrowed to more collateral (or same if matching pair). 4) Re-deposit. 5) Repeat 3-5 times for desired leverage. Use protocols with 'one-click leverage' (Instadapp, DeFi Saver) to compress to single transaction.
Risk management: set health factor alerts (warn at 1.5, deleverage at 1.3, force-exit at 1.1). Maintain 10-20% emergency liquidity in stable wallet to add collateral or repay if liquidation imminent. Never use full LTV cap as target.
Data hygiene and model maintenance
Daily monitoring required for any leveraged position. Health factor changes with both price and accrued interest. Even at 2x leverage, ignoring for a week during volatility can result in liquidation.
Tax considerations: each loop iteration may trigger taxable events (swap to different asset). In jurisdictions where wrapped tokens are non-equivalent (US treats stETH ≠ ETH), looping creates tax friction even before yield realization.
Final validation before capital deployment
Sanity check: deposit $10K, LTV 60%, 3 loops. Each loop adds 60% of previous step. Total collateral = 10000 × (1 + 0.6 + 0.36 + 0.216) = $21,760. Total borrow = 10000 × (0.6 + 0.36 + 0.216) = $11,760. Effective leverage = 21,760 / 10,000 = 2.18x. Health factor = 21760 × 0.85 / 11760 = 1.57 (healthy).
Post-loop validation: actual leverage = total_collateral_value / equity. Net APR = (collateral × supply_APY - borrow × borrow_APR) / equity. Cross-check with protocol UI which shows effective rate. Discrepancy >5% indicates miscalculation of fees or compounding.
Authoritative sources
Frequently asked questions
What is yield looping in DeFi?
Looping (recursive lending) amplifies yield by depositing collateral, borrowing against it, swapping the borrowed asset back to collateral, and re-depositing — repeated multiple times. Each iteration adds leverage. Net APR = supply_APY × leverage − borrow_APR × (leverage − 1). Common on Aave, Compound, Morpho.
What is the maximum safe leverage for looping?
Theoretical max leverage = 1 / (1 − LTV). At 75% LTV: 4× max. At 80% LTV: 5×. Safe leverage for sustained holding: 50-70% of max (so 2.5-3.5× at 80% LTV). Going above leaves insufficient buffer for adverse price moves and liquidation risk grows non-linearly with each additional loop.
When is yield looping profitable?
When supply APY exceeds borrow APR by sufficient margin (5%+ ideally). Common profitable setup: stETH (4-5% APY) collateral, borrow ETH (2-3% APR), leverage 2.5-3× = net 6-10% APY. Stablecoin loops (USDC/DAI) profitable when stablecoin APYs spike during high utilization periods. Always check live rates — they change daily.
What is the liquidation risk in looping?
Higher leverage = smaller buffer before liquidation. At 4× leverage with 80% LTV liquidation threshold, your collateral can drop only ~22% before liquidation. ETH has historical 30-day max drawdowns of 15-25%, making 4× borderline. Use health factor alerts (warn at 1.5, deleverage at 1.3) and maintain stable wallet liquidity for emergency repayments.
Is stETH looping safe?
Among the safer loop strategies because stETH-ETH correlation is tight (rare de-peg events). Historical max de-peg: ~7% in May 2022 during 3AC/Celsius crisis. Modern stETH operations are more robust. Safe leverage: 2-3× on stETH-ETH. Higher leverage (4×+) still vulnerable to acute liquidity events that can de-peg stETH temporarily.
How are looped positions taxed?
Tax treatment varies by jurisdiction. In the US, IRS generally treats: (1) swap between wrapped tokens as taxable event even if functionally equivalent (e.g., ETH → stETH), (2) borrowing is not taxable but interest is not deductible for personal use, (3) liquidation triggers capital gain/loss on liquidated collateral. Consult a crypto-tax specialist for your specific country.
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