Emre Yumlu 
Innovative DeFi protocol Ethena Labs has introduced a new feature called Liquid Leverage on the popular money market platform Aave. This integration aims to provide users with enhanced yield opportunities through a liquid leverage strategy, combining multiple stablecoin assets efficiently.
What is Ethena’s Liquid Leverage?
Liquid Leverage, developed by Ethena Labs, allows users to deposit a balanced mix of sUSDe and USDe tokens—50% each—into Aave. By doing so, users can earn additional promotional rewards on USDe, which currently offers approximately 12% APY, alongside the standard USDe lending rate and the native APY of sUSDe.
Eligibility for Liquid Leverage Rewards
To qualify for the Liquid Leverage rewards on USDe deposits, users must meet the following criteria:
-
Deposit both sUSDe and USDe, with rewards capped to 50% of the USDe supplied (any additional USDe will not earn rewards).
-
Borrow stablecoins such as USDC, USDT, or USDS—borrowing USDe itself disqualifies rewards.
-
Execute at least one “loop” transaction, meaning borrowing stablecoins against sUSDe and USDe and then redepositing those assets back into Aave.
Ethena Labs recommends utilizing Aave’s sUSDe e-mode, which now accepts both USDe and sUSDe as collateral, improving capital efficiency starting from the launch date.
Key Innovations of Liquid Leverage
One of the main issues sUSDe users faced before was the mandatory 7-day unstaking cooldown. Liquid Leverage addresses this by maintaining at least half of the user’s position in sUSDe while allowing the USDe portion to provide flexibility and risk management.
Rewards and Earnings
Eligible users can claim their Liquid Leverage rewards via the Merkl.xyz platform. The first rewards claim will be available approximately one week after integration launch, with subsequent claims possible every 8 to 12 hours.
Additionally, the current USDe Ethena rewards rate will be adjusted after one month for most money market integrations. Users who loop sUSDe and USDe/eUSDe PT tokens while holding the underlying Yield Token (YT) position will also earn points on their YTs.
You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.