New lending and borrowing platform Loopscale, operating on Solana, utilizes a modular, order book system intended to improve capital efficiency as compared to the usual pool-based DeFi approach. Loopscale has several ways for users to earn yield by providing liquidity, including by creating automated loops that allow for the control of leveraged positions generating amplified returns, although these come with additional risk considerations.
There are some high yields available right now on a platform called Loopscale, which operates on Solana and–as you might have guessed from the name–offers some ready-made looping strategies so you can control larger, leveraged positions and ramp up your returns.
So, let’s take a look at what Loopscale is, why Solana itself is looking like an increasingly dominant DeFi chain, and then at how to execute some strategies on Loopscale.
What Is Loopscale?
A decentralized platform for lending and borrowing, based on Solana, Loopscale operates using a modular, order book system. This means Loopscale is moving away from pools, believing that capital efficiency can be improved through the use of onchain order books.
By doing this, lend rates and borrow rates are equalized, and–according to Loopscale’s own detailed explanation of its architecture–rates can emerge from the market rather than from algorithms, while markets are created from the presence of willing counter-parties.
Loopscale launched publicly this month, has already reached a TVL of over $40 million, and the protocol is gaining increased attention.
What’s Happening With DeFi on Solana?
Loopscale also emphasizes that its mode of operating is possible because it’s built on Solana, which has low transaction fees coupled with high onchain throughput, and in fact–although Solana last year became closely linked with memecoins–the chain is now gaining increased traction as a network for DeFi.
This can be seen in the onchain data, as $1.7 billion has been bridged to Solana from other chains over the past three months, while recently Solana was the top chain for DEX volume over a seven day period, registering a figure of over $15 billion.
How to Use Loopscale
To get started, open the Loopscale app, connect a Solana wallet, and the tabs we’re interested in are Lend and Loop, so let’s start with the Lend option. Before carrying on though, note the risks associated with DeFi, which include smart contract exploits, frontend attacks, and systemic risks across DeFi and crypto, while there are also specific looping risks that we’ll cover below.
Lend
Starting from the public launch, Loopscale initiated its Genesis Phase campaign, which offers boosted incentives to users depositing to the Genesis Vaults to provide lending liquidity on the protocol. This is the simplest way to start earning returns as it’s passively managed from a user point-of-view, so to begin, click on the Lend tab.
At the top of the page, you’ll then see three Genesis Vaults, two of which use stablecoins, while the highest returns in this feature can be found on the SOL Genesis Vault at, currently, 9.6%. Note also here that there is limited capacity–which is being rapidly approached–within which to supply assets.
Click Deposit on the vault and you’ll then get…
