Introducing Smart Loops | wstETH15x

Intro

In 2022, Index Coop launched icETH, a simplified way to tap into leveraged staking yields and it quickly attracted tens of millions of dollars in TVL. Fueled by stETH’s listing on Aave, leveraged looping exploded across DeFi as the go-to strategy to maximize ETH yields. 

Today we are excited to unveil the next evolution: wstETH15x. 

Introducing Smart Loops

Index Coop Smart Loops are yield tokens built on advanced ‘recursive looping’ strategies. Each Smart Loop taps into established DeFi protocols like Morpho and Aerodrome to help you capture higher yields safer and without the hassle. wstETH15x is the first in the series, providing several key benefits:

Higher Leverage, Real Yield

• All yield is created through genuine staking rewards amplified by leverage. No gimmicky token incentives. 
• At the time of launch, wstETH15x delivered a 7-day APY of 9.84%, outperforming nearly every ETH yield opportunity listed on vaults.fyi.
• Where icETH amplified staking returns up to 2.5x, wstETH15x can reliably achieve up to 15x leverage on real ETH staking yields. 

No Manual Upkeep and Built-in Protections

• Smart Loops automate the entire process and safeguard against sudden depegs by reducing leverage when necessary. 
• This allows users to sleep easy while reaping the rewards of higher levels of leverage. 

Simplified Accounting in a Single Token

• All Smart Loops are repricing tokens, meaning they accrue value directly to the token price over time. 
• Repricing tokens can drastically simplify bookkeeping by allowing users to simply track one token’s value over time rather than a stream of transactions. 
• Depending on your jurisdiction, this can potentially classify value accrued as capital gains, rather than ongoing “income” from each re-stake. (disclaimer: not tax advice, please consult a certified professional.)

Lower Fees on Base: 

• Being native to L2, wstETH15x features greatly reduced gas costs compared to Ethereum Mainnet.

The Strategy

All Smart Loops employ a version of the following strategy:

• Lending some amount of capital 
• Borrowing another currency against it
• Swapping the borrowed amount for the original asset
• Repeating the process (i.e. looping) in order to gain more exposure to the original asset 

wstETH15x aims for about 15x leveraged exposure to stETH. Following the logic above, it deposits stETH to Morpho, borrows ETH against it, swaps the borrowed ETH for wstETH, and lends that wstETH as collateral—repeating until it reaches the 15x target. This multiplies the staking yields you’re collecting, but it also magnifies price movements.

With each loop, your incremental exposure to the lent asset gets smaller and the “safe-zone” tightens. That means the strategy becomes more sensitive to any price differences between the lent and borrowed assets. 

As the band narrows and the sensitivity to price movements amplifies, managing the position by hand can become tricky. 

Smart Loops handle this by targeting a specific leverage range and automatically rebalancing whenever the price moves outside that band. This lets you push leverage further than you’d ever feel comfortable doing manually. 

Fees

• Annual streaming fee: 0.75%
• Mint fee: 0.10%
• Redeem fee: 0.10%

The Risks

• Smart-contract / Protocol risk for Lido (liquid staking) & Morpho (lending market)
• Liquidation risk (leverage)
• Withdrawal/liquidity risk (wstETH)

‍

Ready to leverage smarter? Explore wstETH15x now and see how high your ETH yields can climb—without losing sleep.