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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

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

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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.