What is Hydro Loop Stake?

Hydro Loop Stake is a leveraged yield optimization feature that is designed to maximize the efficiency of staked assets within the Hydro Protocol ecosystem. This strategy enables users to cyclically borrow against their liquid staking tokens (e.g., hINJ) and reinvest them into staking or yield-generating activities, effectively compounding their returns.

Unlike traditional staking, which offers linear rewards, Loop Stake introduces a recursive mechanism whereby staked assets are utilized as collateral to borrow and mint additional liquidity. This liquidity is then looped back into the protocol, generating exponential yield while maintaining exposure to the original asset’s staking rewards.

The core objective of Loop Stake is to empower users to amplify capital efficiency without sacrificing long-term holding. It combines key features from liquid staking, borrow and lending protocols to create an easy-to-use yield optimization strategy within Hydro’s DeFi infrastructure.