Introduction to Leveraged Yield Farming
Leveraged Yield Farming is the core product of Alpaca Finance. The concept behind leveraged yield farming isn’t as complicated as it might seem at first mention; If yield farming with X yields you Y returns, then yield farming with 5X yields you 5Y returns. In other words, borrowing funds to ramp up your position X, aka using leverage, multiplies your yields. Of course, it’s not for free; Like any lending platform, you have to pay borrowing interest for the privilege to use borrowed funds. Yet, where leveraged yield farming shines is in its capital efficiency–the ability to borrow more than you put up as collateral.