Leveraged Staking Carry Index

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The question

Leveraged staking looks easy. You stake ETH, get a liquid staking token (wstETH), post it as collateral, borrow ETH, re-stake, repeat. The yield number goes up and everyone is happy. The question a serious allocator asks is the one nobody puts on the marketing page. At what leverage does this actually pay, and at what point does it quietly hand your position to the next volatility spike. I built this index to answer that from live on-chain data. Every chart below is embedded straight from the dashboard and updates on its own.

The whole game in one line

Leveraged staking is a carry trade. You earn the staking yield on the full levered position and you pay the borrow rate on the part you financed. At leverage L the gross return is roughly APR_stake times L, minus APR_borrow times (L minus 1). The number that decides everything is the carry spread, staking APR minus borrow APR. Positive spread and leverage multiplies a good thing. Borrow rate climbs above staking yield, which happens fast when ETH borrow demand spikes, and leverage now multiplies a loss. Keep that one sentence in your head and the rest of the dashboard reads itself.

Headline read

The top band: carry spread, gross yield at 3x and 5x, the staking APR, and the borrow rate. Five numbers, one verdict.

How to read it. Look at the spread first. If it is positive and the 3x and 5x figures step up above the plain staking APR, the loop is adding value today. If the 5x number sits below the 3x, or below the 1x staking APR, borrow costs are already eating your leverage and the regime is turning against you. The borrow rate is the canary. It moves harder and faster than staking yield, so it is the thing that flips the whole trade.

The decision: yield vs leverage

This is the chart that settles the argument. Left axis, gross yield against leverage. Right axis, your post-stress loan-to-value against a flat line at the liquidation LTV, which for wstETH collateral sits around the low nineties percent.

How to read it. The two lines pull in opposite directions. Yield climbs in a straight line and climbs slowly, because each extra turn only adds that thin carry spread. Risk climbs in a curve, because every turn lifts your LTV and the same depeg shock now throws you a bigger absolute jump. The decision is the point where the post-stress LTV line touches the liquidation line. That is your cliff. The sweet spot sits well to the left of it, where one more turn of leverage stops paying you enough to justify the jump in liquidation risk. In practice that lands at low single-digit leverage, nowhere near the maximum the protocol will technically allow. Going past the cliff does not earn more. It just shortens the time until something breaks.

The mechanics

How the loop actually composes. Stake, receive stETH, wrap to wstETH, post as collateral, borrow ETH, re-stake, go again. Each turn compounds both your staked notional and your debt.

How to read it. It is a geometric series. At a target LTV of t, each turn re-deposits a fraction t of the last one, so your total exposure converges to 1 divided by (1 minus t). Your leverage is bounded, not infinite. A 75 percent target lands near 4x, an 80 percent target near 5x. The chart shows why you stop early. The final turns add almost no exposure while pushing you right up against the liquidation LTV, with no room left for a depeg or a rate spike. The gap between where you operate and where you get liquidated is your safety margin. The whole loop is really one negotiation. How much of that margin are you willing to spend for a little more yield.

Carry over time

The spread is alive. It breathes with staking rewards and, far more, with ETH borrow demand. These two charts track the 1x spread and then fan it out across leverage, so you see both the normal weather and the storms.

Reading the spread chart. Watch the line against zero and against its own moving average. Long stretches comfortably above zero are the weather this product is built for. The sharp dips are almost always borrow spikes. When levered ETH demand surges, utilisation on the lending market jumps and the borrow rate can briefly punch through the staking yield. A 30-day average that holds positive through those dips tells you they were noise. An average drifting toward zero tells you the edge is being competed away.

Reading the levered version. Same spread, replotted at 1x, 2x, 3x and 5x. The fan-out is the point. Leverage scales both directions. On good days the 5x line rides well above the 1x. During an inversion it dives well below it. The width between the lines is your sensitivity. The more they fan, the more a small move in the borrow rate swings what you actually take home. This is the picture that argues for a leverage cap. You are buying a thin sliver of extra upside with a much fatter downside tail.

Capacity and execution

A backtest that works on paper is worthless if the market cannot take your size, or if the act of running the loop moves the very rate you depend on. These two charts answer how big this can get, and where you should borrow.

Reading market depth. The bars are total ETH supplied and borrowed on the lending market. The line is utilisation, borrowed over supplied. Utilisation is the number that matters, because lending rates follow a curve that kinks hard near the top. As the pool fills up, the borrow rate goes vertical. So your real capacity is not the headline pool size. It is how much you can add before your own borrowing pushes utilisation into the steep part of the curve and re-prices your entire position. Deep pool with plenty of room below the kink is healthy. Thin pool near the kink is a trap.

Reading the venue comparator. The same borrow, ETH against wstETH, priced across venues over time. They almost never agree. Different rate models, different incentives, different utilisation mean one venue is usually cheaper, and the cheapest one keeps changing. Routing your borrow to the lowest line is free money. It widens the spread and adds no risk. That is why a serious leveraged staking product is multi-venue and never married to one lending market.

Why it matters

This is the layer that lets a leveraged staking vault walk into a risk committee and walk out with a yes. It turns a degen meme into a bounded, monitored product. It is also the work I like most. A real decision, settled by data, with nowhere to hide.