Carry trade
A strategy that borrows in a low-yielding currency / asset and lends in a higher-yielding one, capturing the spread.
In stablecoin land, the carry trade often takes the form: borrow USDC at the supply-side cost, deploy into a higher-APY venue (Pendle PT, sUSDe, USDM), capture spread net of fees and slippage. Carry trades are unwound rapidly under stress — see also Basis trade for the perp-funding flavour.
Related terms
- Basis tradeLong spot + short perpetual (or futures) to harvest the funding-rate differential, structurally close to delta-neutral.
- LeverageBorrowing against a position to multiply exposure — and amplify both gains and losses.
- Recursive lendingBorrowing against deposited collateral, redepositing the proceeds, and looping to amplify exposure.