Abracadabra Enables Leveraged Yield Farming On Stargate

DeFi lender Abracadabra has launched a new Degenbox strategy that will allow users to leverage up their yields on Stargate, an omni-chain liquidity protocol.

Stargate facilitates cross-chain native asset swaps, meaning that users can transfer assets across blockchains without using a bridge. 

The protocol does this by incentivizing stablecoin liquidity on its supported chains. It operates on seven networks — Mainnet, BNB Chain, Avalanche, Polygon, Arbitrum, Optimism and Fantom — and offers yields of 3% to 4.5% on USDC, USDT and BUSD.

Total Value Locked (TVL) peaked at around $4B in April and has since fallen to $1.3B after a drop in the price of STG, Stargate’s native token. 

Abracadabra’s new offering has the potential to drive liquidity back to Stargate. Yield farmers are piling in even though rewards will not be live for a few days.

The borrowing caps on both Stargate pools have already been reached with $67M borrowed within two hours of the launch announcement. 

With the ongoing crisis at Terra, DeFi users may be looking for alternatives to Anchor and its double-digit yields on stablecoins.

A leveraged Stargate farm would yield north of 20% at current prices with no borrow fees or interest being levied at present.

Abracadabra founder Daniele Sesta tweeted that these new strategies are meant to help users to rotate out of UST. He also outlined some of the risks of the strategy, cautioning borrowers to be mindful of slippage when entering their positions.