Stella

Stella (formerly Alpha Homora) offers leveraged yield strategies with a pay-as-you-earn borrowing model: borrowers pay 0% interest and instead share a portion of realized profit with lenders.

0% borrow APR — lenders are compensated from strategy profit share rather than interest, aligning incentives between borrowers and lenders.

- Stella Strategy: The leverage side of the protocol. Users ("leveragoors") open leveraged positions on supported DeFi strategies, initially Uniswap V3 concentrated-liquidity pools (e.g. ETH/USDC.e, ETH/USDT, ETH/ARB, WBTC/ETH), borrowing liquidity from Stella Lend at 0% borrowing interest to size up their positions and yields. - Stella Lend: The lending side. Capital providers deposit assets into lending pools and earn 'real yield' generated by leveragoors' strategy activity rather than a fixed interest curve. Because returns derive from strategy profits, there is no traditional APY cap. - Pay-As-You-Earn (PAYE) fee model: Stella's core mechanism replacing borrowing-interest accrual. Leveragoors pay 0% cost to borrow for the whole leverage duration; only when a position closes with positive net yield is a portion of that profit deducted as the fee to lenders ('no gain, no pay'), aligning incentives between borrowers and lenders.

- Smart Contract: Stella's leverage relies on 'spell'-style strategy contracts routing capital between Stella Lend and external protocols (e.g. Uniswap V3). The predecessor Alpha Homora suffered a ~$37M exploit in Feb 2021 where a faked spell contract was treated as legitimate, demonstrating the concrete danger of this composable-strategy design. - Systemic: Leverage layered on top of external DeFi protocols creates protocol-to-protocol contagion. The 2021 Alpha Homora incident abused Cream Finance's Iron Bank and left ~$32M of cross-protocol bad debt, showing how a failure in one integrated protocol can cascade into Stella's positions and lenders. - Collateral: Leveraged positions (initially Uniswap V3 LP positions) are volatile and subject to impermanent loss; adverse price moves can push a leveragoor's position below the required collateralization and trigger liquidation, with lenders exposed to shortfall if liquidation is not fast enough. - Oracle: Valuing leveraged LP positions and triggering liquidations depends on accurate on-chain price feeds. Manipulated or lagging oracle prices could misvalue collateral or delay liquidations, a recurring attack surface for leverage/LP protocols. - Governance: The protocol and ALPHA token are steered by the Alpha Venture DAO / Stella core team, which sets supported strategies and risk parameters. Concentrated control over which strategies are whitelisted and how the PAYE fee is set concentrates decision-making risk.

- Prime brokerage / margin lending: similar — Stella intermediates between capital providers (Stella Lend) and traders who want leverage (Stella Strategy), much as a prime broker lends against and finances leveraged positions for clients.; differs — There is no fixed financing/borrow rate; instead of accruing margin interest, Stella charges nothing up front and takes a share of realized profit only (Pay-As-You-Earn). It is non-custodial, on-chain, and liquidations are automated by smart contracts rather than a broker's risk desk.