LVF Yield Scenarios: Borrower Profitability

To assess the economic performance of self-lending strategies, we analyze User A’s profitability across various LVF yield environments. In each case, the user has $10,000 in LP exposure (2x leveraged via $5,000 borrowed capital) and pays a fixed net interest cost of $700 annually.

Profitability Under Varying LVF Yields

LVF Yield	Gross Yield	Net Interest Cost	Net Profit	Effective APR (on $5K)	External Lender APR
50%	$5,000	$700	$4,300	86.0%	45.0%
40%	$4,000	$700	$3,300	66.0%	45.0%
30%	$3,000	$700	$2,300	46.0%	45.0%
20%	$2,000	$700	$1,300	26.0%	45.0%
10%	$1,000	$700	$300	6.0%	45.0%

📌 User A remains profitable across a broad range of yield conditions, with increasing capital efficiency as volatility and yield rise. Even at 10% LP yield, the strategy remains net positive.

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