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Sections used: Earn · Margin · Trade  ·  Delta exposure: None (XLM-neutral)  ·  Risk level: Medium  ·  Complexity: Medium
Supply XLM to Vanna’s Earn pool to earn XLM lending yield. Simultaneously, open a Margin Account with USDC collateral, borrow an equal dollar value of XLM, and swap the borrowed XLM to USDC via Spot. The Earn position creates a long exposure to XLM; the borrow-and-swap creates an exact short of the same size. The two cancel out - net XLM delta is zero - while both legs continue to generate yield.

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Why this is delta-neutral

  • Earn position: you hold XLM in Vanna’s pool. If XLM rises, the USD value of your position rises - gain. If XLM falls, it falls - loss.
  • Borrow + swap: you owe XLM debt. If XLM rises, your debt’s USD cost rises - loss. If XLM falls, your debt’s USD cost falls - gain.
Sized equally in dollar terms, these two effects cancel exactly. What remains is purely the yield arithmetic: XLM Earn APY plus any yield from the swapped USDC, minus XLM borrow cost.

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How to execute

1

Supply XLM to Earn

Go to Earn → select the XLM pool → Supply your XLM. Note the dollar value of your position - you will match this amount in the borrow step.
2

Open a Margin Account

Go to Margin → Open Account if you don’t have one yet.
3

Deposit USDC as Margin collateral

Go to Margin → Deposit & Borrow → deposit USDC as collateral. This backs the XLM borrow - your USDC is not exposed to XLM price movement.
4

Borrow XLM equal to your Earn position

Borrow the same dollar value of XLM that you supplied to Earn. This is the hedge - the borrow offsets the Earn position’s price exposure. Keep Health Factor at 1.5× or above.
5

Swap borrowed XLM to USDC

Go to Trade → Spot Swap → swap the borrowed XLM to USDC. Choose Soroswap or Aquarius, review price impact, and confirm. The USDC lands in your Margin Account.
6

Deploy USDC for additional yield (optional)

Deploy the USDC from the swap to a Blend USDC pool via Farm to earn an additional yield layer on top of the Earn position.

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Example

XLM supplied to Earn$500 worth of XLM
XLM Earn APY12% → earns $60/year
USDC Margin collateral$300 USDC
XLM borrowed (equal to Earn value)$500 worth of XLM
Borrowed XLM swapped to USDC$500 USDC
USDC deployed to Blend pool (10% APY)earns $50/year
XLM borrow cost (15% APR)−$75/year
Net annual yield60+60 + 50 − 75=75 = 35
Net XLM price exposureZero
This strategy is profitable when XLM Earn APY + USDC farm APY exceeds the XLM borrow APR. If borrow costs rise, the net yield narrows - monitor all three rates regularly.

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Exiting the position

Exit in reverse order to avoid leaving open debt:
1

Withdraw from Blend USDC pool

Go to Farm → select the Blend USDC pool → Remove Liquidity → withdraw your full position.
2

Swap USDC back to XLM

Go to Trade → Spot Swap → swap enough USDC to cover the full XLM debt, including accrued interest.
3

Repay the XLM borrow

Go to Margin → Repay → repay the full XLM debt.
4

Withdraw USDC collateral

Withdraw your USDC collateral back to your wallet.
5

Withdraw from Earn

Go to Earn → Withdraw → redeem your vTokens and receive your XLM plus all accrued yield.

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Risk profile

RiskLevelNotes
XLM price riskNoneEarn position and borrow debt cancel exactly when sized equally
Liquidation riskMediumHealth Factor drops as borrow interest accrues
Rate riskMediumStrategy turns negative if XLM borrow APR exceeds combined yield
Swap slippageLowCheck price impact on the XLM → USDC swap before confirming
Smart contract riskLowInherent to all on-chain protocols

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What to monitor

Rate condition - The strategy earns positively only when XLM Earn APY + USDC farm APY > XLM borrow APR. If borrow rates spike, exit before the yield goes negative. Hedge ratio - The XLM borrow must equal the Earn position’s dollar value. If XLM moves significantly between the two operations, the hedge may be slightly off - rebalance if needed. Health Factor - Monitor regularly. Accruing borrow interest reduces HF over time even without price movement.