Recursive lending
loopingleveraged lending
Borrowing against deposited collateral, redepositing the proceeds, and looping to amplify exposure.
Common stablecoin recursion: deposit USDC → borrow USDC → redeposit. Each loop multiplies APY but also liquidation risk. StableLens flags pools where realised TVL is dominated by recursion (a small fall in supply rate can cascade as borrowers unwind).
Related terms
- LeverageBorrowing against a position to multiply exposure — and amplify both gains and losses.
- LiquidationForced sale of collateral when a borrower's health factor falls below the protocol's threshold.
- UtilisationBorrowed assets / supplied assets in a lending market — drives the supply / borrow rate via a kinked curve.