> For the complete documentation index, see [llms.txt](https://documentation.bakerdao.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://documentation.bakerdao.io/mechanics/looping.md).

# Looping

*Using leverage carries risks. It is possible to lose all of your collateral if you do not pay back your loan in time.*

## Leveraged borrowing

* **Advanced Feature:** Users can borrow `$BERA` against their `$BREAD`, use the borrowed `$BERA` to bake or buy more `$BREAD`, and repeat this process; i.e., *looping*
* **UI Support:** A user friendly interface on the BakerDAO website facilitates looping in one transaction, making it quick and simple to open and unwind leveraged positions
* **Fee Discount:** The `$BREAD` baking fee is discounted from `2.69%` to `1.42%` when opening leveraged positions
* **Liquidation:** If a leverage position defaults, then the `$BREAD` collateral is burned, causing the ratio of `$BERA` per `$BREAD` to increase. `$BREAD` collateral from liquidated positions are burned collectively, every day, at `00:00 UTC`

{% hint style="info" %}
**Important Note**: You can only have one active loan position at a time in BakerDAO. If you already have a Standard loan, you cannot create an automated looped position (and vice versa) until you close your existing position
{% endhint %}

<figure><img src="/files/aAFznkDNHDtoOy9mBvK5" alt=""><figcaption></figcaption></figure>

{% hint style="info" %}
Using looping allows users to create leveraged $BREAD exposure. If a position is max looped, no more liquid $BERA may be borrowed against the position due to diminishing amount of $BERA being used each loop.
{% endhint %}

## One-click looping

In order to facilitate easier opening of looped positions, users can open max looped positions in one click which utilize flashloans to create the position in a single transaction. This allows users to easily open and close leveraged positions, and baking fees are reduced from `2.69%` to `1.42%` for these transactions.

## Solidity implementation

```
    /// @notice Calculates the leverage fee for a loan
    /// @param bera Amount of BERA to borrow
    /// @param numberOfDays Duration of the loan in days
    function loopCalcs(uint256 bera, uint256 numberOfDays) public view returns (uint256 bakeFee, uint256 userBorrow, uint256 overCollateralizationAmount, uint256 interest) {
        bakeFee = bera * leverageFeeBps / BPS_DENOMINATOR;
        uint256 userBera = bera - bakeFee;
        userBorrow = userBera * COLLATERAL_RATIO / BPS_DENOMINATOR;
        overCollateralizationAmount = userBera - userBorrow;
        interest = getInterestFee(userBorrow, numberOfDays);
    }
```

## Flash Burn

This functionality allows users to close a position using the `$BREAD` collateral itself without needing to acquire additional `$BERA`. To use this,  select "Existing Collateral" in the repayment modal.

When you choose "Existing Collateral", the following process occurs:

1. **Collateral Valuation**: The system calculates the current value of your BREAD collateral in terms of BERA based on the protocol's backing ratio.
2. **Burn Fee Application**: A 2.69% burn fee is applied to your BREAD's valuation, reducing the effective value.
3. **Debt Settlement**: The remaining value (after the fee) is used to settle your outstanding loan.
4. **Excess Value Check**: The system determines if there's any value left after repaying the loan:
   * If the remaining value exceeds the loan amount, the excess is returned to you as BERA.
   * If the remaining value is less than or equal to the loan amount, nothing is returned (the entire collateral value is consumed).

<figure><img src="/files/qdj31Hm1B6BZkuvNqRtp" alt=""><figcaption></figcaption></figure>