Introducing QLP Collateral Borrowing & Looping
We’re rolling out a powerful new mechanic on Quanto.trade that gives traders even more flexibility and capital efficiency when participating in the QLP.
How it Works
When users stake ETH (or other supported collateral), they now automatically borrow QTO at any LTV they choose—instantly, and with zero interest—and stake that QTO directly into the QLP.
By doing so, they:
- Receive $QLP (QLP tokens)
- Earn PnL from QLP performance
- Maintain control of their original collateral (as long as health ratios are met)
To retrieve their collateral, users simply:
- Unstake QLP back into QTO
- Repay the borrowed QTO to unlock their assets
Liquidation Mechanics
Every borrow position has a liquidation price based on the collateral’s value and QTO’s price.
- Example: If you borrowed QTO against ETH, and ETH’s price drops or QTO’s price rises enough to breach your liquidation threshold, your position is liquidated, and your collateral is forfeited.
- To avoid liquidation, you can add more collateral or partially repay your QTO debt.
- Note: liquidation price is flexible, e.g. you can get liquidated when ETH price is down or QTO is up.
Key Parameters:
- Liquidation LTV: The base LTV for collateral (e.g., 0.95 for ETH)
- Max Borrow: Liquidation LTV × 0.75, giving users ~25% safety buffer
New Possibilities: QLP Looping
This mechanic enables QLP looping for compounding exposure:
- Stake QLP
- Borrow QTO
- Stake borrowed QTO into QLP again
- Repeat to amplify yield and exposure (with caution)
Why This Matters
- Capital Efficiency – Put your idle collateral to work while still earning on it.
- Looping Strategies – Boost exposure to QLP without fresh capital.
- Flexible Leverage – Adjust your borrow level at any time.
We’re excited to see the creative strategies the community develops with this new tool. Trade smart, monitor your health ratio, and make the most of your collateral.
Read the docs here.
- Team Quanto