By the end you will have taken apart the three trades professionals actually run, seen that each one is only Act 2 machines stacked with intent, and learned what every market-neutral stack is really betting on.
Somewhere right now, a fund is depositing a staking receipt, borrowing against it, and staking the borrow. A desk is holding a coin and shorting the same coin at the same time. To an outsider both look like confusion. They are recipes, and professionals run them every day.
Here is tonight's promise: nothing new gets introduced. Act 2 stocked your pantry; a strategy is a recipe: the same ingredients, combined for a specific taste. And every recipe has one step where it burns. Recipes, not ingredients.
Check the shelf. Leverage from The Trader's Toolkit. Funding from Perps and Funding. The borrowing counter from Lending Markets. The receipt that earns while you hold it, from Liquid Staking and Restaking. And The Money Legos taught you to stack floors and read each one.
That is the whole pantry, and that is the point: strategies are grammar, not vocabulary. Tonight is three sentences professionals build from words you already own. Each has a name insiders drop without explaining. By the end, you can drop them too.
Recipe 1. The fund deposits stETH at the counter from Lending Markets, borrows ETH against it, and stakes the borrow through Liquid Staking and Restaking: more stETH. It walks that back to the counter and goes again. Each lap harvests the same spread, staking yield above borrow cost, one more time. The name: looping.
Read what it really is: leverage from The Trader's Toolkit, wearing yield clothing. Its burn step: the borrow rate, the thermostat from Lending Markets, climbs above the staking yield and every lap turns negative. Or the receipt sags below its backing and the loan's health, from Liquidations, buckles.
Recipe 2. The desk holds the asset and shorts it with a perp from Perps and Funding, in exactly equal size. Every position has a sensitivity to price: how much it gains or loses when the asset moves. Traders call that delta. Two equal, opposite deltas cancel to zero: delta-neutral. Price stopped mattering.
Each side of a paired position is a leg. The short leg collects funding while longs are crowded; the held leg can earn its own yield on top. Burn steps: funding flips sign and neutral becomes a slow leak, or one leg dies in a spike before the other can cover it.