Leveraged Stake protocol operates on three levels, focusing primarily on levels 1 and 2 for its core functionality.

Level 1

The 1x1 vault accepts underlying asset (e.g. wstETH) deposits and uses a leverage source (e.g. Aave v3) to achieve the target leverage. This vault is fully automated, adjusting the loan-to-value ratio with each deposit to maintain the target leverage.

Level 2

The aggregation vault also accepts the same token deposits, but distributes them across various 1x1 vaults, selecting protocols with the lowest borrowing rates. This vault is automated, ensuring optimal distribution and the lowest borrowing rates with each deposit.

Level 3 (optional)

For certain assets like LSTs, there can be an additional benefit in holding a basket of leveraged tokens. This third layer of the protocol introduces a basket of leveraged tokens, offering portfolio diversification and extra yield from providing liquidity to AMMs.