> For the complete documentation index, see [llms.txt](https://whalehub-1.gitbook.io/whalehub/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://whalehub-1.gitbook.io/whalehub/leveraged-farming/what-is-leveraged-farming.md).

# What Is Leveraged Farming

Leveraged farming lets you multiply an Aquarius liquidity position without adding more capital. You supply LP as equity, the vault borrows against it on [Blend](https://docs.blend.capital) and turns the borrowed asset into more LP — all in one signed transaction.

> **Status: testnet preview.** The leverage vault runs on Stellar **testnet** at [app.whalehub.io/leverage](https://app.whalehub.io/leverage). It is not live on mainnet, has not been audited, and holds no real funds. Mainnet requires the production oracle, an external audit and a funded Blend pool.

## What you get

|                   | Plain liquidity providing | Leveraged farming                                      |
| ----------------- | ------------------------- | ------------------------------------------------------ |
| What you deposit  | LP (or a token pair)      | The same LP, as equity                                 |
| Exposure          | 1× your deposit           | Up to \~1.67× your deposit                             |
| Debt              | None                      | A borrow on Blend, against your LP                     |
| Yield             | Pool fees + AQUA rewards  | The same yield on a larger position, minus borrow cost |
| Can be liquidated | No                        | **Yes**                                                |
| Exit              | Withdraw anytime          | Unwind anytime, partially or fully                     |

## It is a spread trade, not a yield boost

Leverage does not create yield. It buys you more of the pool's yield with borrowed money, and you pay the borrow rate on the borrowed part only:

```
net APY on equity = (LP APY × L) − (borrow APR × (L − 1))

where L = leverage, e.g. 1.55
```

Leverage pays **only while the borrow rate sits below the LP yield**. If the borrow rate rises above it, levering up earns less than simply providing liquidity. That is why the interface shows the live borrow rate, your net APY, and the **break-even borrow rate** for your chosen leverage before you sign anything.

Worked example on measured rates (Aquarius XLM/USDC concentrated at 10.77% unboosted, Blend XLM borrow at 0.10%, 16 Aug 2026):

| Leverage         | LP exposure on $1,000 | Debt        | Net APY on equity |
| ---------------- | --------------------- | ----------- | ----------------- |
| 1.00× (plain LP) | $1,000                | —           | 10.77%            |
| 1.55×            | $1,550                | $550 of XLM | \~14.8%           |

These are arithmetic outputs of the rates above, not projections. Blend rates move with utilisation and can change without notice.

## Why the borrowed asset is XLM

Blend prices each asset by how much of it is being borrowed. On Stellar, borrow demand is for dollars, not for XLM — so USDC borrows at roughly 11% while XLM sits near its rate floor at **0.10%**. Borrowing USDC at 11% against a 10.77% LP yield would *lose* money at any leverage. Borrowing XLM is what makes the product work, and it is a Stellar-specific advantage.

## What you are taking on

* **Liquidation.** If the value of your LP collateral falls far enough against your debt, Blend liquidates part of the position. The interface caps leverage at 92% of the liquidation boundary to leave headroom.
* **Direction.** Borrowing XLM against an LP that is half XLM makes the position partly *short* XLM. A large XLM rally grows the debt faster than the collateral — that is the move that liquidates, and it also means a rally returns less than plain liquidity providing would have.
* **The spread inverting.** If the borrow rate climbs above the LP yield, unwind or deleverage.
* **Your position, your risk.** Each depositor holds an isolated position with its own health factor. If yours is liquidated, you lose part of your collateral; no other depositor is affected, and nobody else's position can affect yours. WhaleHub's contract manages the position but can only send withdrawals to you.

## Fees

One fee is planned: **10% of net profit after borrow costs**, measured against your position's high-water mark. No management fee, no deposit fee, no withdrawal fee. A fee on principal or on gross yield would consume the few percentage points that leverage adds in the first place.

|                                       |                                                                   |
| ------------------------------------- | ----------------------------------------------------------------- |
| What is charged                       | 10% of profit, after the interest paid on your debt               |
| When nothing is charged               | In a drawdown, and while a position recovers to its previous peak |
| High-water mark                       | Per position — the same gain is never charged twice               |
| Deposit / withdrawal / management fee | None                                                              |

Of the fee collected, **30% is routed to the BLUB-AQUA pool** as two-sided liquidity, which stays protocol-owned. That is pool depth rather than a buyback: the leverage product generates fees, and those fees deepen the pool behind AQUA staking and the BLUB vault.

The fee is not live yet — the testnet vault charges nothing, and the fee module ships with mainnet.

## Next

* [How Leverage Works](/whalehub/leveraged-farming/how-leverage-works.md) — the one-transaction mechanism, step by step.
* [Oracle and Risk Controls](/whalehub/leveraged-farming/oracle-and-risk.md) — how the collateral is priced and what stops it being gamed.