Leveraged Yield Farming
Mars Protocol enables users to participate in leveraged yield farming by integrating with Astroport AMM Liquidity Pools.
Last updated
Mars Protocol enables users to participate in leveraged yield farming by integrating with Astroport AMM Liquidity Pools.
Last updated
This powerful strategy allows users to deploy capital more efficiently by using LP tokens as collateral, amplifying exposure to yield opportunities through leverage.
Liquidity provision is foundational to DeFi. When users supply liquidity to a pool on Astroport, they receive LP tokens, which represent their share of the pool. These tokens accrue trading fees and are often incentivized through emissions programs and third-party rewards.
To enhance capital efficiency, Mars Protocol has whitelisted Astroport LP tokens as valid collateral within its Credit Accounts. Users can use these tokens to:
Borrow assets to enter LP positions
Leverage existing positions for higher yield
Optimize collateral deployment across the broader Mars ecosystem
Users can employ various strategies to join Astroport liquidity pools with leverage:
Borrow the underlying LP assets (e.g., USDC and NTRN) directly
Borrow a different asset (e.g., WETH.axl) and use Astroport’s mechanisms to enter the pool via single-sided liquidity provisioning
The borrowed capital is automatically swapped (if needed) and used to provide liquidity, increasing the user's exposure to LP rewards while maintaining a single, consolidated Credit Account.
Thanks to Mars’ cross-collateralized architecture, users are not restricted to matching the pool’s native asset pair. This flexibility significantly reduces borrow costs, simplifies transactions, and increases access to yield farming strategies.
Mars Protocol’s leveraged yield farming is currently live on Neutron through its integration with Astroport. This integration offers several key advantages:
Custom Ratio Provisioning: Unlike traditional AMMs (e.g., Apollo Vaults on Osmosis), Astroport allows asymmetric liquidity deposits, meaning users can supply liquidity in any asset ratio—or even single-sided.
Reduced Transaction Overhead: No additional swap transaction is needed when supplying in a custom ratio. This results in lower gas costs and improved capital efficiency.
Protocol Incentives: Astroport supports LP incentives through:
ASTRO token emissions, driven by governance votes
Third-party rewards, attracting deeper liquidity to selected pools
A user borrows USDC and NTRN to enter the USDC-NTRN LP pool:
Borrow Rates:
USDC: 8.00%
NTRN: 4.15%
LP APY: 26.05%
Initial Account APY: 3.91%
Post-Strategy Account APY: 9.26%
By borrowing both LP assets, the user fully leverages the LP position and captures enhanced yield through the pool’s incentives.
Instead of borrowing the native LP assets, the user borrows WETH.axl, which has a lower borrow rate of 2.83%. Upon entering the LP:
The borrowed WETH.axl is automatically swapped into one of the LP assets.
Single-sided liquidity provisioning is used to minimize transaction complexity and gas usage.
LP APY: 26.05%
Initial Account APY: 3.91%
Post-Strategy Account APY: 10.16%
This strategy improves yield performance over the previous example by optimizing for the lowest borrow rate, demonstrating the flexibility and capital efficiency enabled by Mars Protocol’s integration with Astroport.
Platform Integration
Astroport on Neutron
LP Collateralization
LP tokens accepted as collateral in Credit Accounts
Single-Sided Provisioning
Supported by Astroport to reduce swaps and gas costs
Borrowing Flexibility
Users can borrow LP assets or alternative tokens
Yield Optimization
Increased LP exposure enhances farming returns through leverage
APY Impact
Leverage boosts Credit Account APY significantly when properly managed
Leveraged Yield Farming on Mars Protocol combines the power of on-chain leverage with efficient liquidity provisioning and incentive farming. By integrating directly with Astroport, Mars offers a seamless and flexible path to optimized yield strategies - backed by a robust risk and collateral model.
If LP asset pairs are highly correlated, they may also qualify for High Leverage Strategies (HLS), enabling even greater capital efficiency.
