Loop Investment FAQ

How does Loop work?

Loop supplies Asset A to a lending protocol as collateral, borrows Asset B, converts it into Asset A, and supplies it again. This process repeats based on the number of loops you select, increasing both the collateral position and the amount borrowed.

Can Loop result in a loss of principal?

Loop is not a principal-protected product. If borrowing costs exceed asset returns, net returns may decline or become negative.

How is Estimated APY calculated?

Estimated APY uses current collateral yields, borrowing rates, and the number of loops to estimate the position’s net annualized return relative to your initial principal. Collateral returns may include supply interest, yield generated by yield-bearing assets, and OKX rewards, etc.

Borrowing rates, rewards, and market conditions may change, so Estimated APY is for reference only and does not represent actual or guaranteed returns.

What are Estimated Transaction Loss and Break-even Time?

Estimated Transaction Loss is the estimated cost of opening a position based on the asset conversion quote at the time of subscription. It includes conversion fees, price impact, estimated slippage, gas fees, and platform fees. The actual loss is determined by the final execution result.

Estimated Break-even Time is the estimated time required for the current projected net returns to cover both entry and redemption costs. Changes in Estimated APY, market conditions, or transaction costs may affect the actual break-even time.

What is the Health Factor?

The Health Factor measures the liquidation risk of your position. It is determined by factors such as collateral value, debt value, and liquidation thresholds. A higher value generally indicates a safer position. Market price movements or accrued borrowing interest may cause it to decline.

When the Health Factor falls below 1, the position becomes eligible for liquidation. Reducing the number of loops, adding collateral, or repaying part of the debt may help improve it.

Can I redeem at any time?

You can initiate a redemption from the position page at any time. The system will unwind the corresponding Loop position, repay the debt, and return the remaining assets to your wallet. The final amount received may be affected by market prices, slippage, and liquidity.

Redemption may fail or be delayed if the Health Factor is too low, the lending protocol has insufficient liquidity, or transaction slippage exceeds the limit. You may need to reduce the number of loops, add collateral, or repay part of the debt before trying again.

What happens when the PT matures?

When the PT matures, the system will not automatically redeem or unwind the Loop position. You must take action from the position page. If you do not take action, collateral returns and borrowing interest will continue to accrue according to the protocol rules, but PT promotional rewards will stop.

New subscriptions to the current-term product may be suspended before maturity. Depending on the availability of a new-term product, you may redeem your existing position or subscribe to the new term. Existing positions will not automatically renew or roll over. Final returns and amounts received are subject to the actual execution result.

Why is my Loop position value lower than the amount invested?

When you invest USDG or USDT in PT Loop, the system generates PT-USDG and YT. PT-USDG is added to the Loop position, while the remaining YT stays in your wallet and is not included in the displayed Loop position value. As a result, the position value may be lower than the amount invested. You can view the remaining YT in your wallet. Do not sell or transfer this YT. Otherwise, future redemptions may fail or require additional steps. The actual value of YT may also be affected by transaction losses and market price movements.

Why can’t I subscribe to both the ETH and USDG Loop products?

The ETH and USDG Loop products use different Aave E-Mode categories. A wallet address can enable only one E-Mode category within the same Aave market. Therefore, the same address cannot hold both products at the same time.

To subscribe to the other product, fully redeem your current position or use another wallet address. Other Aave lending or borrowing positions held by the same address may also prevent the E-Mode switch and cause the subscription to fail.

How do I realize my xBETH returns?

When redeeming your position, select xBETH as the token to receive. After redemption, deposit the xBETH into OKX Exchange. It will be converted into xETH at the applicable exchange rate, allowing you to realize gains from the increase in the xBETH-to-xETH exchange rate.

Onchain AMM liquidity for xBETH is currently limited, so swapping it directly may result in significant slippage. We therefore recommend using the method described above.

What is Aave E‑Mode, and why is it required for Loop?

Aave E-Mode is a lending mode that increases borrowing capacity and capital efficiency for assets with highly correlated prices.

Loop’s borrowing ratio and looping strategy rely on the parameters of a specified E‑Mode category. You must enable the corresponding E‑Mode category before subscribing; otherwise, you cannot subscribe. This setting may affect other positions held by the same address in the same Aave market, and each address can enable only one E‑Mode category at a time.