List RealFi markets

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List RealFi Markets on Liqwid

Summary

This proposal seeks to establish three new pools on Liqwid to support USDrf and sUSDrf:

  1. USDrf Core Market Pool - a standard stablecoin market where USDrf can be supplied, borrowed, and used as collateral across Liqwid’s core market.
  2. sUSDrf Escrow Pool - a supply-only market for sUSDrf, whose receipt tokens can be used as collateral in the isolated sUSDrf-USDCx market.
  3. sUSDrf-USDCx Isolated Market - a debt-only USDCx pool collateralized by sUSDrf escrow tokens, designed to enable capital-efficient leverage looping of sUSDrf.

Together, these markets would integrate USDrf as a first-class stablecoin within Liqwid while providing a purpose-built isolated market for users seeking leveraged exposure to the yield generated by sUSDrf.

All relevant market and risk parameters remain subject to management by the Liqwid DAO Parameter Committee.

Motivation

USDrf is intended to function as a stable-value asset suitable for integration into Liqwid’s core lending market. Listing USDrf as both a debt and collateral asset would allow users to borrow, lend, and utilize USDrf alongside other stablecoins already supported by the protocol.

In parallel, the proposed sUSDrf markets are designed around a more specialized use case: capital-efficient sUSDrf leverage looping.

Under this structure, users can supply sUSDrf to the sUSDrf escrow pool, receive the corresponding escrow position, and use that position as collateral to borrow USDCx from the isolated sUSDrf-USDCx debt market. Borrowed USDCx can then be used to acquire additional sUSDrf, which may in turn be supplied as additional collateral.

This creates a dedicated and isolated pathway for users who want to increase their economic exposure to sUSDrf and its underlying staking yield without introducing that leverage loop directly into Liqwid’s broader core market.

The isolated design also allows the DAO to manage the risks of this strategy independently from Liqwid’s other lending markets.

1. USDrf Core Market

The first component of this proposal is the addition of USDrf to Liqwid’s core market.

USDrf would operate similarly to other supported stablecoins: it may be supplied, borrowed, and enabled as collateral across compatible core-market pools.

Proposed Parameters

Parameter Proposed Value
Supply Cap $10,000,000
LTV 65.96%
Liquidation LTV 80%
Liquidation Discount 5%
Debt Asset Enabled
Collateral Asset Enabled
Market Core Market

Oracle / Pricing Method

USDrf would use DEX liquidity-derived pricing, subject to the following bounds:

  • Lower price bound: $0.985
  • Upper price bound: $1.005

The oracle therefore uses the observed DEX-derived USDrf price while constraining the value used by the protocol to a range of $0.985–$1.005 per USDrf.

The purpose of these bounds is to limit the effect of short-term market-price deviations on lending-market accounting while continuing to derive the asset’s price from observable on-chain liquidity.

Interest Rate Model

The initial USDrf interest rate model should be based on the existing USDCx pool interest rate model, with a modified starting base rate of:

  • Base borrow rate: 0.5%

The reduced base rate is intended to incentivize early borrowing demand and help bootstrap utilization of the USDrf lending pool.

The remainder of the curve should initially follow the USDCx model, subject to future adjustment by the Liqwid DAO Parameter Committee based on observed liquidity, utilization, borrow demand, and market conditions.

2. sUSDrf Escrow Pool

The second component of this proposal is the creation of a dedicated sUSDrf escrow pool.

This market is supply-only. Users may deposit sUSDrf, but sUSDrf itself will not be borrowable from this pool.

The resulting sUSDrf escrow position will instead serve as the collateral asset for the isolated sUSDrf-USDCx debt market described below.

Proposed Parameters

Parameter Proposed Value
Supply Cap $10,000,000
Borrowing Disabled
Pool Type Supply-only / Escrow
Interest Rate Model N/A
Collateral Use Enabled in isolated sUSDrf-USDCx market

Because the pool does not permit borrowing of sUSDrf, an interest rate curve is not required.

The primary purpose of the market is to custody supplied sUSDrf and provide a collateral representation that can be recognized by the isolated USDCx borrowing market.

3. sUSDrf-USDCx Isolated Debt Market

The third component of this proposal is the creation of an isolated debt-only USDCx pool collateralized by sUSDrf escrow positions.

The pool is specifically intended to facilitate borrowing against sUSDrf while isolating the associated leverage risk from Liqwid’s broader core market.

Market Structure

  • Debt asset: USDCx
  • Collateral asset: sUSDrf escrow tokens
  • Market type: Isolated debt-only market
  • Maximum utilization: 95%

Only the designated sUSDrf escrow collateral will back borrowing within this isolated market.

Initial Interest Rate Parameters

Parameter Proposed Value
Base Rate 0.5%
Rate at Optimal Utilization 9%
Rate at Maximum Utilization 20%
Utilization Cap 95%

The 9% rate at optimal utilization is calibrated around an estimated 8.5% base sUSDrf staking yield target.

This structure is intended to provide inexpensive borrowing when pool utilization is low while allowing borrowing costs to rise as utilization increases. As the pool approaches its maximum utilization, the steeper interest rate is intended to encourage repayment and additional USDCx supply.

These initial rates should be regarded as starting parameters and may be adjusted by the Liqwid DAO Parameter Committee as actual utilization, available liquidity, and sUSDrf economics become observable on-chain.

sUSDrf Collateral Parameters

The sUSDrf escrow token would be enabled as collateral with the following initial parameters:

Parameter Proposed Value
LTV 85%
Liquidation LTV 90%
Liquidation Discount 5%

These parameters are intended to support capital-efficient borrowing against sUSDrf while retaining a liquidation buffer between the maximum borrowing threshold and the liquidation threshold.

Capital-Efficient sUSDrf Leverage Looping

A principal objective of the isolated sUSDrf market is to provide users with a capital-efficient mechanism for increasing their exposure to sUSDrf.

A representative strategy would operate as follows:

  1. A user acquires sUSDrf.
  2. The user supplies sUSDrf into the sUSDrf escrow pool.
  3. The resulting escrow position is used as collateral in the isolated sUSDrf-USDCx market.
  4. The user borrows USDCx against that collateral.
  5. The borrowed USDCx may be used to acquire additional sUSDrf.
  6. The additional sUSDrf may be supplied to the escrow pool and used as additional collateral.
  7. The process may be repeated, subject to the market’s LTV, liquidation thresholds, liquidity, utilization cap, and prevailing borrowing rates.

The economic viability of such a loop depends on the relationship between the yield earned on sUSDrf and the cost of borrowing USDCx. The proposed initial interest rate curve is therefore designed to allow relatively inexpensive leverage when market utilization is low while causing financing costs to increase as borrowing demand consumes available USDCx liquidity.

The strategy is not risk-free. Leveraged users remain exposed to changes in sUSDrf yield, USDCx borrowing rates, oracle prices, liquidity conditions, liquidation thresholds, and any divergence between the assets involved.

Keeping this activity within an isolated market allows these risks to be managed separately from Liqwid’s broader core lending markets.

Proposed Governance Action

If approved, Liqwid governance should authorize the deployment and configuration of the following three markets:

USDrf Core Market

  • $10M supply cap
  • DEX liquidity-derived pricing bounded between $0.985 and $1.005
  • Enabled as both debt and collateral across compatible core-market pools
  • 65.96% LTV
  • 80% liquidation LTV
  • 5% liquidation discount
  • Interest rate model based on the USDCx pool, with a 0.5% initial base rate

sUSDrf Escrow Pool

  • $10M supply cap
  • Supply-only
  • Borrowing disabled
  • Escrow position enabled as collateral for the isolated sUSDrf-USDCx market
  • No interest rate model required

sUSDrf-USDCx Isolated Market

  • Isolated debt-only USDCx pool
  • 95% utilization cap
  • 0.5% base rate
  • 9% rate at optimal utilization
  • 20% rate at maximum utilization
  • sUSDrf escrow collateral enabled at:
    • 85% LTV
    • 90% liquidation LTV
    • 5% liquidation discount

Approval of this proposal would establish the initial market framework for USDrf and sUSDrf on Liqwid, integrate USDrf into the protocol’s core stablecoin markets, and create an isolated venue designed specifically for capital-efficient sUSDrf leverage strategies.

2 Likes
3

no standard stablecoin market for sUSDrf ?
why ? considered riskier than USDrf ? or what is the issue with allowing to borrow it ?

isn’t it a goal to have a composable yield-bearing stablecoin that can you can use in other DeFi protocols for various use cases (not just looping it) ?

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Hey Gil!

There are three main reasons:

  1. Risk isolation and capital efficiency. Using the proposed isolated market/vault structure instead of listing sUSDrf in the core market lets us configure materially higher LTVs without introducing that same risk into the core market. That, in turn, makes looping significantly more capital-efficient and allows for higher leverage.

  2. sUSDrf has junior-tranche risk. sUSDrf is designed to absorb losses first if RealFi ever needs to write down assets or positions associated with the funds it manages. RealFi has several mechanisms in place to reduce the likelihood of that happening, but the risk is not zero. We’ve seen similar loss events occur with comparable products in the EVM ecosystem, including markets built around Morpho.

  3. The expected primary use case is as collateral, not as debt. That is also how similar yield-bearing stablecoin products have generally been used across other lending protocols: users deposit them as productive collateral and borrow against them, rather than borrowing the yield-bearing asset itself. The isolated structure is therefore optimized around what we expect to be the dominant use case.

So yes, composability is still a desirable property. The question is more about where that composability should live and under what risk parameters. In this case, isolating sUSDrf preserves its usefulness as composable, yield-bearing collateral while avoiding pushing its specific risk profile into the core market.

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5

thanks for explaining 2.

about 3., yeah. My thinking: why would I lock dollars in sUSDrf vs. another stablecoins Liqwid supports if I can’t eventually borrow anything else than USDCx against it ?
I quite appreciate leveraging or shorting other assets thanks to my productive stablecoins on Liqwid.
Feels like we could have both.

Also, would USDrf really have usage ? Its whole point is to be converted to sUSDrf, no ?

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You’d lock dollars in sUSDrf instead of other stablecoins because you’re looking for yield from RealFi. Not all yield is equal, there are more things to consider besides just APY, most importantly in my opinion:

  • Size (how much liquidity can support a given yield)
    The current yields earned by most stablecoin depositors on the platform don’t sustain with higher-liquidity conditions. AlphaGrowth shared some figures on this on X recently where they showed that although at current scale Liqwid is the best venue for yield on Cardano, those yields don’t sustain with higher liquidity due to lack of larger-scale demand for debt.

In my opinion USDrf is just another stablecoin, and as much as I see the argument for avoiding fragmenting liquidity by concentrating in only a couple stablecoins, it oversees the reality that users prefer different stablecoins for different reasons (namely jurisdictions & legal, accessibility, ease of on and off ramps). Our strategy has been to list as many safe and sufficiently liquid stablecoins in this ecosystem and I’d say within the constraints that we’re working in that has yielded successfully.

7

Sorry, maybe I wasn’t clear:
would USDrf really have usage on Liqwid? since it’s supposed to be rather most of it inside sUSDrf.

And why would sUSDrf arrive on Liqwid, if only for looping it ?
Wouldn’t having Liqwid supporting it as colletaral for more Cardano assets create even more usage for it (supply wise) ? since people on Cardano who like having the possibility to use their stables as collateral would take other stablecoin routes otherwise.

Isn’t the risk not so high to support sUSDrf, compared to USDrf, since most of the difference could be up to the max 10-15% interest. Above that USD itself has to absorb eventual losses.

I am afraid this proposal would create markets with no usage.

8

I am also concerned by 2 things:

  1. the 0.985-1.005 hard caps for USDrf;
    → upwards, 1.005 seems ok
    → downward: 0.985 seems high
    Isn’t it risky to hard cap it so high when a significant fraction of RealFi assets are kept/invested in things like direct lending that can default (Institutional private credit funds, Direct private credit deals). In case of bad losses in their protocol, USDrf could go lower (see below), and then people can buy on DEX, use a collateral on Liqwid and withdraw against a fake 0.985 price and create bad debt.

I question the capacity of USDrf to keep peg in case of protocol loss being absorbed by reserves and sUSDrf exchange rate.
There is a 24 hours or 7 days count down to unstake (from my understanding, theirs docs say these 2 contradictory numbers).
meanwhile, people with USDrf can panic sell on DEXs, and liquidity of USDrf might be thin.

They have a Peg Stability Module, but how much would be in there ? knowing that any funds they leave in it is fund they don’t deploy and don’t generate yield.
And their reserves to absorb losses (on-chain stability fund) will grow only from the yield incomes they don’t redistribute.
And how fast can they really redeem highly liquid U.S. Treasuries and money market funds ?

  1. The isolated pools seems risky indeed. Any loss in their portfolio can change fast the value of sUSDrf if their protocol’s separate reserves are thin.
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  • The funds backing the USDrf portion of their portfolio will not be allocated as aggressively as the funds backing the sUSDrf part.
  • 24 hours is USDrf redemption period
  • 7 days is sUSDrf unstaking cooldown period
  • When liquidity is thin, liquidators can still go through the RealFi protocol - this risk is what we’re rewarding liquidators for extra by down-pricing USDrf 1.5% and sUSDrf subsequently.
  • RealFi has built mechanisms to rapidly respond to redemption requests in case their liquid fund goes dry in stress-case scenarios.
  • Loss waterfalls: 1. Revenue 2. Reserves 3. sUSDrf 4. USDrf - so USDrf is the most protected last-case resort loss-facing group.
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