RECURSIVE STABLECOIN YIELD
loom /luːm/ · verb
to take shape and grow steadily larger as it draws near.
Put stablecoins to work in a yield vault, mint up to 80% back as lUSD, swap, and deposit again. Every pass adds yield-bearing principal — up to 5× your capital at zero borrow cost. And because each deposit splits into two tradable assets, exiting never means unwinding.
lUSD you mint is your own — no interest, no liquidation. Redemption burns back exactly what each receipt records. Real loop efficiency depends on lUSD market depth.
THE MECHANISM
Each cycle turns minted liquidity back into earning principal. The numbers below follow a single 1,000 USDC deposit at an 80% mint ratio.
1,000 USDC enters the vault and starts earning immediately. The position is recorded as vault shares.
Choose 0–80%. At 80% you receive 800 lUSD — plus Receipt #1, the claim on your 1,000 and all its future yield.
Trade the 800 lUSD back into USDC on the lUSD/USDC pool. lUSD is yours — minted, not borrowed.
The 800 goes back in: mint 640, then 512, then 410 … your working principal compounds toward 5,000.
THE EDGE
Looping on a lending market means borrowing against your own collateral and paying an interest spread that eats the yield. In loom there is no lender: lUSD is minted, not borrowed. The debt on each receipt is fixed the moment you mint — it never accrues, and redemption burns back exactly that amount, whenever you choose.
| Ratio | Working principal | 5% vault → you earn |
|---|---|---|
| 60% | 2.5× | 12.5% |
| 70% | 3.3× | 16.7% |
| 80% | 5.0× | 25.0% |
Working principal = 1 / (1 − ratio), the limit of an infinite loop. Effective yield assumes the vault's rate applies to all looped principal and lUSD trades near par.
WHY TWO ASSETS
A deep loop is easy to enter and — in most protocols — miserable to leave. loom splits every deposit into two independently tradable assets, so every leg of your position has its own market and a 5× loop can be left in a single transaction.
One shared token across USDC and USDT markets, minted at your chosen ratio of USD-normalized principal. Sell it, LP it, or hold it to redeem receipts — its supply always equals the debt outstanding on unredeemed receipts.
Each deposit mints an NFT recording principal, vault shares, mint ratio, and the exact lUSD debt to redeem. Whoever holds it owns the exit: burn the recorded lUSD after T+2 and take principal plus all accrued yield at the current share price.
Hold both legs, wait T+2, burn the recorded lUSD, take principal + yield.
Hand the exit rights to a buyer and keep the lUSD you minted — done in one transfer.
Monetize the liquidity now, keep the principal claim, buy lUSD back when you redeem.
AAVE test USDC on Base Sepolia
loom test USDT with open faucet
USDC and USDT are taken at 1:1 USD with no oracle. A depeg of either propagates through the shared lUSD to both markets.
Every loop pass routes through the lUSD market. Deep loops need deep lUSD liquidity; thin pools mean slippage on entry and exit.
A receipt's asset decides what you redeem; the lUSD you burn is always the unified token.
Deployed on Base Sepolia. Yield is simulated by vault balance growth; no real funds, no liquidation engine.
Testnet funds, real mechanics. Five minutes to a 5× position.
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