Leverage, APY and Health Factor by loop count
Same deposit and rates, sweeping loop count 1→10. Every extra loop buys yield and spends safety buffer — this is the table most loopers never see before they stop clicking "loop again".
| Loops | Leverage | Net APY | Health Factor | Max de-peg tolerance |
|---|
Why de-peg risk, not price risk, drives this trade
A loop built from correlated assets (stETH against ETH) is deliberately close to price-neutral — if ETH rallies or dumps 10%, both sides of your position move together and Health Factor barely moves. The exposure that matters is the ratio between the two assets breaking, not their shared dollar price. Model the de-peg tolerance column above against the worst historical stETH/ETH de-peg (roughly 6-8% intraday in June 2022) before picking a loop count. See liquid restaking risk for the equivalent framing when the collateral itself carries slashing risk on top of the peg.
The math behind recursive lending loops
Looping is a geometric series, not a single trade. Deposit $C, borrow L×C against it (L = max LTV), swap the borrowed amount back into more collateral, and redeposit — that's one loop. After N loops, total collateral equals C × (1 + L + L² + … + Lᴺ), which simplifies to C × (1 − L^(N+1)) / (1 − L). That fraction is your effective leverage. With a 93% LTV E-Mode pool, five loops gets you to roughly 5x; ten loops gets you to roughly 7.9x; and as N approaches infinity, leverage converges on a hard ceiling of 1 ÷ (1 − L) — about 14.3x at 93% LTV, no matter how many more loops you add.
Net APY on your original deposit follows directly: net_APY = leverage × yield − (leverage − 1) × borrow_cost, which rearranges to yield + (leverage − 1) × (yield − borrow_cost) — every unit of extra leverage captures the spread between what your collateral earns and what your debt costs, applied to a growing debt balance. That spread is usually thin (0.5-1.5 percentage points between LST staking yield and ETH borrow APY on most protocols in 2026), which is exactly why loopers reach for 5-10x leverage: a 1% spread times 7x leverage is a 7% net yield, versus a flat 1% unlevered.
Health Factor is where the free lunch ends. HF = (total collateral × Liquidation Threshold) ÷ total debt, which reduces to LT × leverage ÷ (leverage − 1). As leverage climbs toward its ceiling, HF converges toward LT ÷ LTV — for a 93% LTV / 95% LT E-Mode pool, that ceiling is about 1.02, a razor-thin buffer that liquidates on almost any adverse move in the peg. That's why the max-de-peg-tolerance column above matters more than the leverage number by itself: it tells you exactly how much the collateral-to-debt asset ratio can slip before you're underwater, independent of where the dollar price goes.