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Lending markets enable financial institutions to operate automated credit facilities where users borrow USDC against tokenized assets. Deposit security tokens as collateral, receive instant loans, and maintain asset ownership while accessing liquidity.
Our lending v2 APIs are coming soon. Financial institutions can currently manage lending markets through the Issuers App, with full API v2 access launching shortly.

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Why Deploy Lending Markets

Automated Revenue

Earn interest on every loan without manual underwriting, credit assessment, or payment collection

Instant Liquidity

Users access capital against tokenized securities without selling positions or triggering taxable events

Zero Overhead

Smart contracts handle collateral management, interest accrual, and liquidations automatically

Built-in Risk Protection

Overcollateralization plus automated liquidations protect against default losses

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How It Works

1

Deposit Collateral

Users deposit tokenized assets (stocks, commodities, real estate tokens) into your lending market as collateral
2

Receive Loan

The market calculates borrowing capacity based on collateral value and configured loan-to-value ratios, then issues USDC instantly
3

Interest Accrues

Interest accumulates continuously based on market utilization—higher demand automatically increases rates
4

Repay or Liquidate

Users repay anytime to unlock collateral. If collateral value drops below safety thresholds, automated liquidation protects the pool

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Key Concepts

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Health Factor

The health factor measures position safety. It compares collateral value against outstanding debt: Health Factor=Collateral Value×Liquidation ThresholdTotal Debt\text{Health Factor} = \frac{\text{Collateral Value} \times \text{Liquidation Threshold}}{\text{Total Debt}}
  • Health Factor > 1: Position is safe
  • Health Factor < 1: Position can be liquidated

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Collateral Factor vs Liquidation Threshold

ParameterPurposeExample
Collateral FactorMaximum borrowing power75% means 10,000collateral=10,000 collateral = 7,500 max borrow
Liquidation ThresholdSafety buffer before liquidation85% provides a 10% buffer above collateral factor
This gap gives borrowers time to add collateral or repay debt before liquidation triggers.

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Interest Rate Model

Interest rates adjust automatically based on pool utilization: Utilization=Total BorrowedTotal Deposits\text{Utilization} = \frac{\text{Total Borrowed}}{\text{Total Deposits}} Low utilization = lower rates (encouraging borrowing). High utilization = higher rates (encouraging deposits and repayments).

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Revenue Model

Institutions earn the spread between what borrowers pay and what liquidity providers receive.
Pool Configuration:
  • Total deposits: $1,000,000
  • Total borrowed: $600,000
  • Utilization: 60%
Rate Structure:
  • Borrow APY: 8%
  • Supply APY: 5.5%
  • Protocol spread: 2.5%
Annual Revenue:
  • Interest collected: 600,000×8600,000 × 8% = 48,000
  • Interest paid to LPs: 1,000,000×5.51,000,000 × 5.5% = 55,000 (weighted by utilization)
  • Protocol revenue: ~$15,000 annually from this single pool
Additional revenue from liquidation penalties (typically 5% of liquidated collateral value).

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Integration Options

Add our Borrow Module to your whitelabel application. It automatically fetches your approved lending markets and provides a complete borrowing interface for your users.Users can:
  • View available markets and rates
  • Deposit collateral and borrow
  • Monitor position health
  • Repay and withdraw

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Liquidity Sources

Liquidity providers (usually the institution deploying the contracts) deposit stablecoins into lending markets, earning yield on their capital. Providers receive LP shares representing their pool ownership-share value increases as interest accumulates.
Anyone can deposit liquidiy alongside institutional providers and earn a stable yield.

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Instance Isolation

Each lending market operates in complete isolation:
  • Separate smart contracts per market
  • Independent configuration and risk parameters
  • No cross-market exposure
  • Full regulatory separation between institutions
Bank A’s lending markets never interact with Bank B’s markets, maintaining clean risk boundaries and compliance segregation.

Smart Contracts

Architecture, roles, and security model

Setup Guide

Deploy and configure your first market

Management

Day-to-day operations and monitoring

Liquidation

Automated liquidation and external integrations