How to Use the Looping Strategy in EVAA with LP Tokens

How to Use the Looping Strategy in EVAA with LP Tokens

The looping strategy in EVAA (Ethereum Virtual Asset Agreement) allows users to maximize their earning potential by using LP (Liquidity Provider) tokens as collateral. This approach not only optimizes your investments, but also improves your market exposure. Below, we’ll show you how to implement this strategy effectively and safely.

Initial Preparations

Before you begin, make sure you have the following:

• A TON wallet connected to STON.fi and EVAA applications.
• A TON balance to cover transaction fees.
• Basic knowledge about EVAA, including concepts such as collateral, health factor, and settlement thresholds.

Step 1: Provide STON.fi Liquidity to Obtain LP Tokens

Access the STON.fi app and provide liquidity in the TON/USDt v2 pool.

• Head to Pools.
• Select TON/USDt v2 and specify the amount you want to contribute.
• Click Add liquidity and review all the details.
• Confirms the liquidity provision.

Upon completion of this step, you will receive LP tokens that you can use as collateral in EVAA.

Step 2: Connect to EVAA

Visit the EVAA app and connect your wallet by following the on-screen instructions. This process allows you to explore supply and lending opportunities within the EVAA protocol.

Step 3: Supply Your LP Tokens in EVAA as Collateral

On the EVAA homepage, select the LP pool and click Supply.

• Choose TON/USDT-LP as the asset to supply.
• Select the number of LP tokens you want to use as collateral. You can choose from 25%, 50%, 75%, or 100% of your available tokens.

Step 4: Borrow Funds Responsibly

With your LP tokens as collateral, you can now request funds. Go to the EVAA homepage and select Apply for a loan.

• Choose the asset you want to borrow and indicate the amount.
• Keep in mind that each loan affects your health factor; It is advisable to maintain a conservative margin.

Step 5: Add the Borrowed Funds Back to STON.fi Liquidity

The funds you have requested can be used to provide more liquidity in the STON.fi pool, following the same steps as in Step 1.

Step 6 (Optional): Repeat the Cycle with Caution

As you acquire more LP tokens, you can supply them back to the EVAA protocol, repeating steps 3 through 5. However, it is crucial to do so with caution:

• Each cycle increases your exposure and risk.
• Keep an eye on your health factor after each action and make adjustments as needed.

Best Practices Tips

• Cycle fewer times and maintain safe margins; Small buffers can prevent big problems.
• Monitor the health factor after each action and do not underestimate the warnings.
• Have a stable balance ready to cover quick top-ups or partial refunds if the markets fluctuate.
• Find out about the market parameters in EVAA, as rates and limits may change.
• Monitor the fee income of your LPs; It’s part of the reason for strategy, but don’t rely solely on it.

Always remember to do your own research (DYOR) on any interaction within DeFi.

For more information on impermanent losses on DEX platforms, visit our article on impermanent losses.

Source: How to Use the Looping Strategy in EVAA with LP Tokens