> For the complete documentation index, see [llms.txt](https://docs.noon.capital/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.noon.capital/3.-the-yield-engine/yield-strategies/looping.md).

# Looping

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

## <mark style="color:$primary;">What is Looping</mark>

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

## <mark style="color:purple;">Noon</mark> <mark style="color:$primary;">Deployment Analysis: Summary</mark>

<figure><img src="https://3816918787-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FL26rQzcNmiUZrCXkxkjS%2Fuploads%2FnT78XFVQSOlZ2Uo0TL01%2FNOON%20Deployment%20Analysis%20Looping.png?alt=media&amp;token=1bfa5fe1-dd83-4dd0-aac2-2a4aa9044138" alt=""><figcaption></figcaption></figure>

## <mark style="color:$primary;">Return generation mechanism</mark>

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.

{% hint style="info" %}
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.
{% endhint %}

## <mark style="color:$primary;">Documents</mark>

* A full risk assessment can be found archived in <mark style="color:purple;">**Noon's**</mark> [**Governance Forum**](https://forum.noon.capital/t/risk-assessment-jaaa-clo/25/10)
* Primer: [**Looping Primer**](https://596450103-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FvawK0RJiR8PpG791Q3EH%2Fuploads%2FcEDgbF9jqxXmKKFIQaiT%2FPrimer%20%E2%80%93%20Looping.pdf?alt=media\&token=6a44295d-c9be-436b-9877-bda613e5554d)