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.
Recipe 3. Sometimes the future trades above spot; Perps and Funding named that gap the basis. So the desk buys spot, shorts the future above it, and waits. As the two prices pull together, it pockets the gap, nearly regardless of direction. The name: the basis trade, the oldest arbitrage in finance.
Now it runs on-chain, same physics. The burn step: the gap can widen before it closes, and the short leg's margin can run out first. Being right was never the question. Right trade, wrong wallet size: the survival lesson from The Trader's Toolkit, back for its encore.
Write the three dishes down and they fit on cards. Every recipe card in this kitchen carries the same three lines: the position, what it earns, and the step where it burns. Tap each card to read all three lines.
Step back and the cards rhyme. None of them bets on a direction. Each bets on a relationship: staking yield against borrow cost, crowded longs against patient shorts, spot against its future. Relationships are calmer than prices. Calmer is not still: the burn step is always the relationship moving.
And each card passes the discipline from Where Yield Comes From: name the payer. The network's issuance feeds the loop, which pays the counter interest for the privilege. Crowded longs pay the delta-neutral desk. Impatient futures buyers, paying above spot today, feed the basis trade. Real payers, all three.
Why does a non-trader need recipe cards? Because you have been eating these dishes all along. Vaults, Aggregators, Routers warned that a vault is delegation you have not read: often, the strategy inside is one of tonight's cards. Ethena, from Stablecoin Designs, is recipe 2 industrialized into a dollar.
So the ad on the board is not hypothetical furniture; it is the shape most yield reaches you in. Read this one with the cards in your hand.
One test before the act's last lesson: the edge of the lens. The cards are written down, the payers named, the burn steps circled. A fair question follows, and the honest answer draws a line this course will not cross.
Three recipes, fully taken apart. Nothing new was introduced tonight: only leverage, perps, borrowing, and receipts from Act 2, stacked with intent. A strategy is a recipe. Every recipe has one step where it burns. And market-neutral names a relationship bet, never the absence of one.
One force steers all of this money, and it has come up sideways twice already: the votes. Lockers steering emissions, holders steering treasuries. Next: governance in practice, where incentives become politics, and where you learn to tell a decision from decoration.