Leveraged Yield Farming On Aurora EVM
Aries enables liquidity providers to leverage their Aurora LP tokens for enhanced yields and staking rewards.
What Is Leveraged Yield Farming?
Aries isn’t an ordinary lending protocol, but a protocol for leveraging liquidity provider (LP) tokens that allows users to yield farm with 5–10x or an even greater multiplicity, using their LP tokens as collateral.
The ultimate goal is to maximize capital efficiency by enabling borrowers to leverage their LP tokens for enhanced yield farming and staking rewards.
How does it work?
Most other DeFi lending protocols require 150% to 750% over-collateralization to ensure repayment in case of liquidation, so how can Aries offer under-collateralized loans?
While other DeFi protocols allow borrowers to use their borrowed funds however they choose, Aries puts leveraged LP tokens to work, automagically farming yield and earning staking rewards for the borrower. The protocol ensures that a borrower cannot trade or send away their LP tokens without deleveraging their position first.
Additionally, all lending pools on Aries are isolated. This means that lending for one LP token pair won’t impact the stability of other LP token pairs. This also allows the lenders, who supply individual tokens to borrowers, to earn yield on single tokens with 0 impermanent loss.
The risk of liquidation can be easily quantified and managed with Aries. Borrowers can monitor the up-to-date liquidation price ranges for their LP tokens and choose the risk level they’re comfortable with.
Aries gives you the choice to either assume more risk via leveraging LP positions to farm yield, or earning a passive return by providing single-sided token liquidity to the lending pools. This layer of added incentive is designed to encourage liquidity providers and capital stay in the Aurora ecosystem, helping to create a more vibrant landscape.