> For the complete documentation index, see [llms.txt](https://docs.affluent.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.affluent.org/factorial-legacy/leveraged-yield-strategy/looping-lst.md).

# Looping LST

#### **Looping with Liquid Staking**

Liquid staking involves locking tokens in a staking protocol to earn rewards while receiving a derivative token that represents the staked assets. This derivative can be used as collateral to borrow additional assets, enabling a leverage loop.

1. **Initial Staking:** A user stakes a base token (e.g., TON) in a liquid staking protocol (e.g., Tonstakers, Bemo, etc.) and receives a derivative token (e.g., tsTON, stTON, etc.).
2. **Collateralizing:** The tsTON is deposited into Factorial as collateral to borrow more TON.
3. **Looping:** The borrowed TON is staked again to mint more tsTON, repeating the process to maximize staked assets.
4. **Yield Generation:** The compounded tsTON balance accrues staking rewards while maintaining exposure to the underlying asset.

**Key Considerations:**

* **Interest Rates:** Borrowing costs must be lower than staking yields for the strategy to remain profitable.
* **Volatility Risk:** Significant price fluctuations in tsTON or TON could trigger liquidation events.
* **Protocol Compatibility:** Ensure the chosen protocols support the required assets and leverage functionality.


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