Enabling users to leverage Solend cUSDC yield and expanding usage of cTokens across the ecosystem.
cUSDC vault and leveraging stablecoin yield
The recent market downturn has led to an increase in demand for stablecoin yield leverage, as such Hedge is launching a Solend cUSDC vault to ensure our users can make the best out of the platform. cUSDC leverage enables users to increase their USDC exposure on Solend — i.e. if the USDC supply APY is 4% and the vault has been looped once to get a 2x exposure the vault would act as if it had 8% APY.
This can be achieved by the following steps:
- USDC is deposited into Solend (https://solend.fi/ctokens) which will thus be earning a supply yield with cUSDC tokens given out as receipt.
- These cUSDC tokens are able to be deposited into Hedge to mint USH.
- Users can swap USH against USDC to redeposit this USDC to get more cUSDC
- By depositing the cUSDC tokens into Hedge again they are able to mint more USH and gain even more exposure to cUSDC yield.
A better UI experience to enable one click cUSDC leverage will also be made available later, pending some other integrations.
The current cUSDC vault parameters are:
- Min collateral ratio: 105%
- Init fee: 0.25%
- Ongoing interest: 0.5%
- Not redeemable
- No recovery mode
This implies a few things.
Firstly due to the min collateral ratio being 105%, the max cUSDC leverage is 21x.
Secondly, this is Hedge’s first non-redeemable vault meaning that other users cannot try to redeem the cUSDC collateral if USH falls below peg. Instead the peg is defended by introducing buy pressure via an interest rate. The interest rate may be changed from time to time to help defend peg.
Lastly, because this vault type lacks a recovery mode, all users are able to have their vault collateral ratio be as low as 105%.
Where does Solend cUSDC yield come from?
Solend cUSDC yield is generated from the users who borrow the supplied assets and pay interest — in this case USDC. The supply APY is a floating rate based on the utilization of the pool. More details can be found here.
Helping expand cToken usage across the ecosystem with Switchboard
Hedge’s new cUSDC vault is powered by a new Switchboard cUSDC feed which will make it a lot easier for other protocols to integrate cUSDC and if they wish to spin up a feed, other cTokens. Instead of needing to write a custom pricer module to pull the exchange rate from Solend, protocols will be able to treat cTokens like any other asset, speeding up integration.