Lending Market

Reservoir’s Lending Market on Morpho powered by Steakhouse will enable users to mint rUSD on a variable or fixed rate basis against a variety of crypto assets.

The market can be viewed here.

Overview:

SteakrUSD is similar to how Spark works for Maker. The protocol mints rUSD and supplies it to the morpho SteakrUSD market or in some cases users supply rUSD into the SteakrUSD market. A different set of users (loopers) then come in with USDC to mint srUSD, deposit it as collateral in SteakrUSD and then borrow rUSD (now putting it into circulation). When the rUSD is borrowed they can do whatever they want with the rUSD although many choose to mint more srUSD and when they do that the rUSD they borrowed itself is burnt). SteakrUSD is on the asset side of the protoocl balance sheet because by deafuly the protocol has rUSD deposited there that it earns yield on.

In order to mint srUSD, a user needs to burn a rUSD. Users come in and mint srUSD (by coming in with usdc, minting rUSD, and then burning the rUSD for srUSD). Then the user takes srUSD to Morpho or Dolomite or Euler and uses it as collateral. In the steakrUSD market in particular, the Reservoir Protocol lends rUSD against srUSD as collateral (some Reservoir PTs from Pendle are also in the market). This enables users to borrow rUSD at a very efficient and stable rate. This rUSD that is borrowed can be redeemed by the PSM for USDC or it can be burned to mint srUSD to continue looping.

All rUSD is fungible and it does not matter if it’s minted from USDC or borrowed from a lending market.