The Risks and Realities of Leverage Staking

This section conducts an analytical study on the leverage staking strategy. We also offer a generalized formalization encompassing other potential scenarios in Appendix B.

In addition to the standardized scenario discussed above, real-world applications of leverage staking can vary significantly among users. For instance, a user might choose not to reinvest all of their received stETH on Aave. For a more detailed exploration of this variability, please see the generalized formalization in Appendix B.

Authors:

(1) Xihan Xiong, Imperial College London, UK;

(2) Zhipeng Wang, Imperial College London, UK;

(3) Xi Chen, University of Sussex, UK;

(4) William Knottenbelt, Imperial College London, UK;

(5) Michael Huth, Imperial College London, UK.

This paper is available on arxiv under CC BY 4.0 DEED license.

[8] https://docs.aave.com/risk/liquidity-risk/borrow-interest-rate