This is when users deposit collateral like BUSD, mint AUSD & sell that into more BUSD. Then redeposit the new BUSD to mint more AUSD, and so on. Strategy A of Borrow to stake could be said to be neutral/indifferent to the AUSD peg. Meanwhile, Strategy B of looping AUSD borrowing is SHORT on AUSD, and is the primary reason why a hard peg on the sell side, keeping AUSD below <$1, is vital. To unwind their positions, users who loop AUSD will have to buy back AUSD. If AUSD price substantially rises after they opened their positions, they would have to pay more for buying AUSD and would thus take losses. This is why their positions have short exposure. As a leverage strategy, Strategy B is in theory higher risk. So having a hard peg on sell side of <$1, when combined with AUSD’s Alpaca Guard-like liquidation protection, allows users who loop AUSD to minimize sell side risk, making it easily estimated & effectively trivial.