Looping

Part of the yield engine. Approved by governance; discussion and analysis on the governance forum.

What is Looping

Looping is a leveraged strategy: collateral is supplied to a money market, stablecoins are borrowed against it, the borrowed funds buy more collateral, and the cycle repeats.

Each loop amplifies exposure to the spread between the collateral's yield and the borrowing cost.

Noon's looping uses principal tokens as collateral, currently limited to PT-USDe and PT-sUSDe

Noon Deployment Analysis: Summary

Return generation mechanism

When the collateral's locked PT rate exceeds the borrowing cost, looping multiplies that positive spread. A worked example: collateral yielding 10% APY against $USDC borrowed at 7% leaves a 3-point spread, amplified across each loop. The protocol's target range for the strategy is 15–30% APY. Whether such conditions exist at any moment depends on the rate regime: when borrowing costs rise toward or above the PT rate, the spread compresses or inverts, and the strategy unwinds rather than persists.

By design, looping sits at the higher-risk end of the basket and is sized accordingly: strict collateral ratios, health factor monitoring, and position limits constrain it, and its allocation reflects its risk rather than its headline return.

Looping is a leveraged strategy. Leverage amplifies returns and losses alike, and positions carry liquidation risk. Any return range here describes conditions observed in the published analysis, not an expectation, target, or guarantee.

Documents

• A full risk assessment can be found archived in Noon's Governance Forum

• Primer: Looping Primer