Liquidity miners all know that dilemma — either hold onto LP positions to earn trading fees but miss out on lending arbitrage, or withdraw to arbitrage but lose previous gains. Now there's finally a way to get the best of both worlds.

A major lending platform recently launched a new feature: directly use high-liquidity DEX LP tokens as collateral, borrow stablecoins at low interest rates to arbitrage, while the LP position continues to generate trading fees on the DEX. It sounds a bit unbelievable, so let’s look at the numbers.

The combined three-layer returns are indeed quite impressive. The first layer is the basic DEX trading fees, for popular pairs like USDT/USDC, BNB, with annual yields generally around 5%-10%, which is the underlying income of your LP position. The second layer is lending arbitrage: collateralize the LP tokens, borrow stablecoins at a low interest rate of 1.1%, and use them on a top lending platform to earn 20% annualized returns. After deducting the 1.1% interest, the net profit margin can reach 18.9%. The third layer is the platform’s 50% fee rebate, returned in platform tokens, effectively acting as an additional subsidy.

Let’s take a real example: suppose you hold a BNB/USDT liquidity position worth $100,000. With an 8% annualized fee yield, you earn $8,000 per year. Now, collateralize this LP token and borrow $55,000 in stablecoins for arbitrage. You earn $11,000 annually, minus $605 in interest, netting $10,395. Combining both, just this operation alone yields several thousand dollars more per year.

The key is that your capital keeps flowing; your LP position is always working on the DEX. You don’t need to dismantle and redeploy your position just to arbitrage — this truly maximizes capital efficiency.