Looping / leverage
This section defines Lyrasing’s recursive LRT leverage posture for a future money market. The point is not to describe a deployed market, launch parameters, current APY, an optimizer, or an application flow. The point is to name the policy vocabulary a future implementation would need before looped positions can be reviewed.
Recursive leverage is the combination of collateral quality, borrow asset behavior, market depth, AVS exposure, operator and vault posture, and insurance capacity. If any of those inputs are weak, recursive exposure should compress before simple single-supply use. Looping reuses the same collateral thesis several times; it does not make that thesis safer.
Looping model
Lyrasing treats a looped position as a combined exposure stack:
| Layer | Risk question |
|---|---|
| Base collateral | Which LRT, wrapper, vault route, redemption path, and oracle unit support the first supply position? |
| Borrow asset | Does the borrowed asset create ETH correlation, LRT correlation, liquidity mismatch, or redemption dependency? |
| Recursion depth | How many supply-borrow turns can occur before the risk envelope is exhausted? |
| Market depth | Can secondary liquidity or primary redemption absorb unwind demand under stress? |
| AVS exposure | Which operator sets, networks, slash conditions, safety delays, or epoch windows can impair the backing? |
| Insurance capacity | Is capacity mapped to the repeated slash surface, or is it shared, pending, thin, or unmapped? |
Reading order
Read this section in order:
- Recursive flow names the conceptual supply, borrow, resupply, and repeat pattern without turning it into an execution guide.
- Parameter posture defines the qualitative parameter families that would gate leverage before numeric launch values exist.
- Risk envelope combines price, liquidity, oracle, AVS exposure, operator, vault, timing, and insurance capacity risks.
- Liquidation unwind explains why route selection and unwind order matter when recursive exposure is stressed.
- Loop policy defines reviewable, conservative, compressed, and no-loop policy states.
The upstream vocabulary lives in the AVS-risk methodology, LRT collateral framework, and slashing-insurance design sections. The glossary definitions for LTV, AVS exposure, insurance pool, and Looping / leverage are the shared anchors.
Build-time posture
These are build-time docs. They describe methodology and policy vocabulary, not markets, collateral listings, reserves, oracle contracts, route integrations, insurance policies, or working product flows. A later protocol design can turn this language into implementation only after every input has an observable source, a freshness rule, a stress treatment, and an owner.