Leveraged Yield Farming is Alpaca Finance’s core product. The concept behind leveraged yield farming is not as complicated as it might seem; If yield farming with X yields Y, then Yield farming with 5X brings you 5Y returns. In other words, raising funds to increase your position X, also known as leverage, multiplies your returns. Of course it’s not free; As with any lending platform, the privilege of using borrowed funds requires you to pay interest on borrowed funds. However, leveraged yield farming shines in its capital efficiency – the ability to borrow more than you put down as collateral.
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