The best stablecoin borrow rates on Arbitrum -- [Liquity v2]

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Introducing Nerite:

ETH is down 33% in the last quarter, in the face of record levels of institutional adoption.
Where is the best place to borrow stables against your wstETH on Arbitrum?

  • Aave has the deepest USDC supply, and they will charge you 4.7% to borrow against your wstETH with a max LTV of 75%.

  • Compound can offer $1.5m USDC for borrows at 4% APR with a max LTV of 80% until you hit the kink and APRs shoot up.

  • Euler has less supply at ~$200k USDC available for borrow at 5.8%, with a max LTV of 81%.

CupOJoseph, a champion of DeFi on Arbitrum, and founder of Nerite has a solution:

  • Nerite has $24.8M available USND to mint, with flexible borrow rates, and a max LTV of 90%.

Nerite enables wstETH holders to supply their tokens as collateral, and mint USND. Think of Nerite as core DeFi Infrastructure on Arbitrum, and Lido has whitelisted access.

How does Nerite Work:

Nerite is the sanctioned Liquity v2 deployment on Arbitrum:

  • Users set their own interest rates.

  • Users mint USND against underlying collateral, meaning affordable stablecoin leverage on quality assets.

  • USND stakers can stake to earn a share of the protocol via the stability pool.

The protocol is immutable, which means that Lido is one of eight communities that can take advantage of this box of tools.

USND is integrated with Superfluid, specifically so that the wstETH treasury can stop spending wstETH to pay bills. Instead, the DAO can open up lines of streamable credit which pay out to DAO contributors as they complete their work. This change alone would reduce onchain sell volume for wstETH, while building a collateral bank on Nerite.

The Nerite Docs have more information on the streamable aspect of USND.

A Yearn Vault Strategy:

Here’s a simple strategy that wstETH holders can try out today:

  1. Set your own interest rates to borrow against your wstETH.

  2. Deposit borrowed USND the yUSND Stability Vault, and hold your wstETH exposure as collateral.

  3. Earn SHELL points, and claim NERI when the token goes live – soon.

Notes on Redemptions | Tranches:

If users choose to borrow against wstETH at .5% APR, they are at risk for redemption.

Users may consider delegating their interest rate management to Summerstone, as a built-in component of Nerite, while taking advantage of the stability pool to achieve a net positive APR.

  • Interest Rates on Liquity v2 are established in tranches, which means if users would like to pay .5% on their loan – they can do that.

  • In case of a USND depeg, the lowest interest rate tranches, on the highest risk collateral types will be processed for redemption.

  • As wstETH is one of the most conservative assets on Nerite, it will withstand lower interest rates in the face of redemptions compared to other assets like ARB or COMP.

TLDR: If users go too cheap on the rates, their wstETH collateral may be sold for USND, netting the user a small profit for their inconvenience.

The Nerite Docs also have solid information on Redemptions.

Nerite & Liquity v2 are extensively audited, and their repositories are public on Github.