Underlying Strategies

Looping is a defi strategy that functions by borrowing an asset against its yield-bearing asset, then staking the additional yield earned back into the looping strategy (also known as recursive staking). This process can be looped between 3x - 15x depending on the staking APY and borrow rate.

Diagram provided by Contango

HyperOT automatically adjusts the loop multiplier used in the strategy to generate the maximum yield. Rebalancing happens once a day, to optimize the efficiency of the trade and deleverage if needed.

This ensures Hyper OT participants can benefit from the most efficient looping multiplier for the best risk-adjusted yield.

Key Functionalities include:

1. Real-Time Monitoring

   • Tracks staking APYs, borrowing rates, and LST prices throughout the day.

   • Prepares for the daily rebalance by collecting up-to-date data.

2. Unified Multipliers

   • Everyone in the vault is exposed to the same leverage setting.

   • Simplifies management and keeps user returns consistent.

3. Risk Controls

   • Daily deleveraging triggers if LTV exceeds safe thresholds.

   • Circuit breakers pause new loops during sudden market swings.

   • Gradual unwinding reduces the chance of forced liquidations.

   • Eliminate depeg risk by using the exchange ratio

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How It Works

1. Data Collection

   • System fetches price feeds, APYs, and loan rates each day.

   • Compares current LTV to borrowing and staking spreads.

2. Decision Logic

   • Leverage Up: If staking APY outpaces borrowing costs, AutoLoop borrows more and stakes again.

   • Leverage Down: If borrowing rates rise or LST values drop, it repays loans or unstakes as necessary.

3. Daily Rebalancing

   • At a set time, the vault’s multiplier is updated for all depositors.

   • Ensures uniform adjustments so everyone benefits from optimal settings.

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Usage Flow

1. Vault Deposit

   • You deposit tokens and AutoLoop is automatically enabled.

2. Ongoing Operation

   • AutoLoop rebalances daily with no extra effort on your part.

3. Visibility & Alerts

   • Instant notifications if the system detects abnormal volatility.

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Conclusion

HyperOT handles the heavy lifting of leveraged looping for you. It checks real-time data, rebalances daily, and keeps everyone on the same multiplier to maximize efficiency while protecting your capital. Enjoy optimized returns and peace of mind in any market conditions.