# Money Market Deposits

This strategy utilizes idle liquidity in the form of deposit tokens for additional liquidity at a low cost, or for enhancing yield. For this example, we'll use Aave's aWETH token, but it can also be applied to lending protocol deposit tokens such as Compound.

<figure><img src="/files/CRCTM69hSrR9C97Hq0Hq" alt=""><figcaption></figcaption></figure>

#### Gain Additional Liquidity at a Lower Cost with XY

The AAVE deposit strategy showcases the potential for cost reduction in borrowing:

1. Users deposit ETH into AAVE, earning base yield (currently \~2% APY)
2. The resulting aWETH is deposited and used as collateral in Tren Finance's isolated module
3. Users can borrow XY at significantly reduced rates (1% vs AAVE's 9.27% on GHO)
4. Use XY as you would any stablecoin, including:
   1. Buy / long another asset
   2. Short the underlying deposit token to achieve delta neutral positioning; earn the deposit APY from Aave + funding rate yield on the short position&#x20;

#### Multiply Yield on Deposit Tokens

1. Deposit ETH on Aave to receive aWETH deposit tokens
2. Collateralize the resulting aWETH in Tren's isolated module
3. Gain leverage through Tren Finance's [Hooks](/protocol/hooks.md)
4. Rewards can automatically be compounded for you
5. Gain leverage, transforming 2% base APY into significantly higher yields

#### Additional Benefits

* Tren Finance generally offers higher LTV rates compared to money markets like Aave, allowing for greater capital efficiency
* Through [Hooks](/protocol/hooks.md), users can loop their deposit tokens using Tren Finance and repaying back their debt using collateral, something that isn't natively possible on money markets like [Compound](https://app.compound.finance).


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