Yield “looping,” or leveraging, is a process where a DeFi user repeatedly supplies a yield-bearing asset (e.g., sFRAX) to a lending protocol and borrows stablecoins against it. The borrowed stablecoins are then used to acquire more yield-bearing collateral, effectively increasing its exposure with leverage. This strategy can be profitable if the yield generated by the leveraged collateral exceeds the interest rate (borrowing cost) of the stablecoin loans. However, there are risks involved with yield looping strategies.