Basically clarified the matter of BTCS circular lending.

Unlike other ETH micro-strategies on the market, which buy ETH after fundraising and either stake it or store it with custodians.

This company, BTCS, chooses to collateralize $ETH through DeFi protocols like $AAVE to borrow stablecoins, and then use those stablecoins to buy more ETH, and then collateralize again to buy more. Currently, the leverage limit here is 40%.

This means that if you deposit 1E, you can borrow up to 0.4E worth of stablecoins to buy more E.

For shareholders, other ETH micro-strategy companies might only see annual returns of 1 – 4% (including staking) from simply holding coins, but BTCS, combined with 1.3 times leverage, theoretically increases returns to over 5%.

If ETH rises even more sharply, the returns will be amplified again.

This also helps to create market speculation around it, making it more like a DeFi version of a micro-strategy company. However, correspondingly, if the ETH price significantly retraces, this borrowing could trigger liquidation risks, so it must constantly monitor market conditions and may need to replenish or reduce positions at any time.

These are all ideas conceived by some very smart people, it's really impressive.