Lending Markets for Backed bTokens Live on Morpho Blue

A Lending 2339f7e0-5632-4f44-a1d3-b5dc4d9c9f0d for Backed bTokens, specifically wbIB01 (permissioned bIB01 ), has been created on Morpho Blue to enhance the borrowing capabilities of wbIB01 collateral and raise the base rate earned by USDC lenders.

Issued by Backed, bTokens are tokenized RWA like bonds and stocks which can be both permissioned and permissionless. Unlike crypto-native assets, bTokens like bIB01 have yet to be adopted by existing DAO-governed lending platforms, limiting use cases for bTokens.

Morpho Blue enables the creation of trustless and efficient lending markets for any bToken in a permissionless manner, unlocking further use cases, demand, and possibilities.

Unlocking the Potential of RWAs

A report by BCG on asset tokenization suggested the RWA market could reach $16 trillion by 2030. Although RWAs have become an essential part of DeFi, the current adoption is only a fraction of what it could be.

That is because simply porting traditional assets onchain is not enough for institutions to interact with blockchains. RWA asset owners must justify transitioning their assets onchain with efficiency benefits by using them as collateral for borrowing and earning yield.

Morpho Blue is set to play a pivotal role in unlocking such use cases with its flexible market design that support any RWA, including bTokens issued by Backed.

Supporting bTokens with permissionless listing

For asset issuers, active lending markets are vital for adoption of their assets. However, many RWAs are not supported by incumbent lending platforms. Not to mention, assets need to go through a time-consuming governance process to get listed.

Other RWA issuers like  Ondo  innovated by building Flux , an entirely new lending protocol (fork of CompoundV2), to circumvent the governance bottleneck and add functionality for their permissioned tokenized treasury asset,  OUSG .

Creating markets for Backed bTokens on Morpho Blue offers an even simpler and more efficient solution. Instead of rebuilding and maintaining an entire lending protocol, one can establish a trustless lending market for any permissioned ERC-20 token, including wbIB01. This is done similarly to creating a trading pair on UniswapV3 without governance involvement.

Although treasuries and bonds are the bTokens seeing the most adoption due to market conditions, Backed’s infrastructure can support any RWA, including  stocks . The ability to instantly create a lending market with any asset on Morpho Blue helps accelerate go-to-market strategies for any new bTokens.

Maximizing the capabilities of bToken collateral

For borrowers, optimal collateral assets minimize opportunity costs and maximize capital efficiency. This is important for any use case, from generating high yield with a leveraged bIB01 position to short-term cash management.

Morpho Blue offers:

• Higher LTVs: Liquidation LTV of up to 98% allows users to maximize yield from more complex leveraged strategies.

• Lower Borrowing Costs: Morpho Blue has no fees and higher utilization rates (90%), making borrowing costs cheaper than any other lending platform.

• Reduced Gas Costs: Transactions on Morpho Blue consume 3-5x less than more complex lending platforms, resulting in less gas spent on opening, closing, and managing positions.

Raising the base rate for USDC lenders

Creating lending markets for tokenized treasuries, such as bIB01, raises the base interest rate earned by USDC lenders.

Rates earned by suppliers (Supply APR) for crypto-native assets (BTC, ETH, DAI, etc.) are highly sensitive to the demand for leverage. In bull markets, supply APR can reach ~10% but in bear markets, as seen earlier this year, can drop as low as 0.57%.

With a bIB01 market (assuming participants are rational), the base rate earned by lenders will be linked to the underlying yield of treasuries (~5%) irrespective of demand for leverage. As bIB01 yields 5%, there is demand to borrow USDC at a rate close to 5% and swap it for bIB01 to profit from the difference.

The Steakhouse Financial USDC MetaMorpho vault will lend against both crypto-native and RWA collateral, adjusting allocations between the two to optimize interest earned. Lenders can deposit USDC into this vault to earn passive yield stemming from this new base rate.

Disclaimer

This content is not intended as a promotion or solicitation for the use of bTokens, specifically bIB01, or any services offered by Backed or Morpho Blue to individuals in the United States or the United Kingdom.

The information provided is for general informational purposes only and should not be considered as financial advice. It is the user’s responsibility to ascertain whether you are permitted to use the products and services provided by Morpho according to applicable laws or regulations.

The Backed Assets bIB01 (ticker symbol: bIB01) is a tracker certificate issued as an ERC-20 token, which tracks the price of the iShares $ Treasury Bond 0-1yr UCITS ETF.