> For the complete documentation index, see [llms.txt](https://docs.extrafi.io/extra_finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.extrafi.io/extra_finance/leverage-farming/strategy/market-neutral-strategy.md).

# Market Neutral Strategy

### **What is Market Neutral Strategy?**

A Market-Neutral Strategy (Pseudo-Delta-Neutral Strategy) is a leveraged yield farming technique. With this strategy, you can earn high APY on your pairs while reducing your risk by hedging out market exposure.

<figure><img src="/files/Gp7DU55Ai9ozXc0GaHAo" alt="" width="353"><figcaption></figcaption></figure>

### **How does it work?**

Market Neutral Strategy is realized by simultaneously opening one long position and one short position to achieve zero net market exposure on the volatile asset in a token pair.

Let's take the 3X ETH-USDC LP as an example.&#x20;

To get started, deposit a total of 400 USDC into the positions. The strategy works as follows:

1. Borrow 200 USDC (25%) Utilize 100 USDC from your deposit and borrow 200 USDC. The position value will be $300. Since the LP is a 50%-50% position setting, you will have a $300 - $150 = $150 cost in ETH LONG exposure.
2. Borrow $600 worth of ETH (75%) Utilize 300 USDC from your deposit and borrow the equivalent of $600 in ETH. The total position value will be $900. Since the LP is a 50%-50% position setting, you will have a $600 - $450 = $150 cost in ETH SHORT exposure.

Then both the long exposure and short exposure are hedged.


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