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Cap 🤝 Morpho 🤝 Gauntlet: New Markets For stcUSD and PT-stcUSD
Recorded: Sept. 10, 2025 Duration: 0:57:06Space Recording
Short Summary
In a recent panel discussion, industry leaders from Gauntlet, Morpho, and CAP explored the launch of innovative yield-bearing stablecoins and the strategic partnerships driving growth in the DeFi space. With CAP's focus on onboarding institutions and Morpho's upcoming V2 release, the conversation highlighted the evolving landscape of decentralized finance and the potential for new earning opportunities.
Full Transcription
Thank you. Thank you. Thank you. Thank you. Thank you. All right, hi everyone.
I think we're pretty much right on time and just bear with us a couple of minutes as the speakers join.
And then I guess we'll kick it off in like a minute or two. Thank you. And all right, I guess we are here, so I don't see any reason to delay the start. Hi, everyone. My name is Simon. I'm the product marketing lead at Gauntlet, and I am super excited today to host this panel on the new markets for cap stables and yield bearing stable coins.
On Morpho Labs, I have with me John, very own John from Gauntlet so i'm going in order uh um how i see uh users not
not putting gauntlet first uh we have alexandra from morfo uh from the growth team over at morfo
and we have uh benjamin from uh from cap um all right so we've got a pretty packed agenda uh for
the spaces so i'm i'm going to just get started.
So I would love, if that's possible, a quick introduction for each of our guests today.
And I guess we can start with, we can start in the reverse order that I just mentioned
people.
Yeah, Benjamin, if you want to kick us off.
Hey, everyone.
I'm Benjamin, the founder of CAP.
We're at Stablecoin, that's Yod-ulbay, and we're happy to be here collaborating with Gauntlet and Morpho.
Hey guys, my name is Alex and I am part of the growth team in Morpho.
And I've been working very close with Benji and with John and the whole Gauntlet team into onboarding this new collateral.
And hey guys, John Libby here, DeFi BD at Gauntlet.
I'm excited to be with the chads themselves across more phone cap.
Chads, indeed.
Chads, indeed.
Super excited about this panel.
All right, let's kick it off.
I think the overall theme and like
what I'd really like to come out of this space is like just overall understanding of three things.
First of all, Cap introduces a ton of novel mechanisms when it comes to like stable coins
and yield generation for stable coins. It's a little bit complex. Like, honestly, personally,
like diving into the docs was not super straightforward.
Like the role of operators, restakers, delegations.
I think it'd be helpful to go a little bit into details.
Then I think there's an interesting aspect,
which is like how,
like the stable coin strategy of Morpho
and new market listings.
I think this is also very, very interesting aspects that I'd love for us to cover.
And then finally, like the role of curators in listing new markets and allocating new
assets through different kinds of volts with different kinds of like yield targets and
different kinds of risk profiles.
So I guess let's just start, let's just start with the basics. Benjamin, can you just
walk us through what CAP is and what the different CAP assets are?
Yeah, for sure. At a very high level, like I said, we're a yield-bearing stablecoin.
And that has two products, right? We have CUSD, which is a fully redeorable stable.
And you can mint it with USDC and then the future of the money market funds like Benji, like Biddle.
And that's really neat because we don't really need to worry about liquidity.
You can always redeem it for the collateral.
And we don't need to worry about PEG, right, to the extent that we trust the collateral assets.
And then we make yield. Now, instead of following the tradition, which is to have the team generate
yield on behalf of users, we built an allocation engine that allows others to generate yield for us,
particularly institutions. So we have a lot of high-fricancy trading desks and DeFi projects, some asset
managers, et cetera, that compete to generate yield for us. And it's all fully insured because
in order for them to join our network, in order to create yield for our users, they
need to be fully covered by restaking delegations from symbiotic and eigen layer. And so in any scenario, the stable ground holders are fully covered.
That's really cool. And we'll definitely get into a little bit more details later on,
especially around the mechanisms of delegation. And I think you've already onboarded one operator,
which is concrete recently. So congrats on that.
That's like the first use case for that.
So I'm really keen to dive like a little bit deeper into that a little later.
Next, let's, Alexandra, I love if you could give like an intro on for someone who doesn't
know what Morpho is, kind of like how, what Morpho is and how how it works um this is my favorite question
so Morpho is a lending protocol currently we have around 12 billion in deposits um if we speak a bit
more in detail so on the borrow side you have this primitive money market structure which means that
basically you are borrowing against one collateral asset,
which means that you can borrow on like high LTV and generally it's a bit more efficient way.
On the lender side, we do have this concept of vaults, which means that as an end user or as an integrator, I'm supplying my liquidity to a vault. And then the vault curator is allocating
this liquidity between these borrow markets, which essentially allows to separate risk.
So, for example, for USDC, you would have a few different options.
And for example, Gauntlet has like three different risk profiles of USDC vaults, which is prime, core and frontier.
is prime, core, and frontier. Prime is something that would be considered very, very low risk.
You would be lending the asset only against three blue chip collateral assets. Core would
be a bit higher on the risk curve and frontier would be more DeFi native, let's put it this
way. And then it could be replicated for a majority of other assets uh but essentially morphe is a landing protocol
which is an infrastructure that was a really good answer i can tell that you've had a lot of practice
uh great and then um kind of like concluding the round table in terms of like intros of both people and projects.
John, I'd love to ask you, it's also, this is my favorite question, not to answer, but to ask,
which is what's a risk creator? What's the role of like a, someone like Gauntlet play in bringing like assets like CUSD and STCUSD to like Morpho?
Yeah, that was one of the core innovations of Morpho is typically in lending architecture
across DeFi prior to Morpho is the decisions on like who would list a market on a lending
protocol was usually a DAO or a centralized kind of team.
And they're making decisions for the whole protocol.
With the curation model and like the vaults,
what this side of the design operates
is Morpo outsource the risk curation
rather than being decided by a single group of people
for the whole protocol or for a model design
for the whole ecosystem as a whole. it's now outsourced to just
a group or a team of people that make decisions on the risk profiles for their own vaults.
And the exposure on our job is to basically design risk profiles on our vaults and to ensure
safety for depositors in the vault, as well as offer diversified yield for users based
on their risk profile and like their tolerance.
So basically, you know, rather than rely on a doubt about let Gauntlet handle it.
And that's what we kind of do as a risk here is we choose and we allocate proportionately
what we think is best.
That was also a really good answer.
I don't know if you've answered that a lot, but that's also a really good answer. All three were really good answers. Before we go any further, I think I kind of forgot to yield and yield bearing um i think i do have to give this disclaimer um obviously uh but um yeah
let's uh this is the world that we live in so we do we do have to uh we do have to preface it with
uh with some uh some caveats so uh let's let's let's continue to the next question um i think
i'm really keen.
Now's the time that I really want to dive a little bit deeper into the mechanics of Europe for SDCUSD.
I think it's really a novel use case.
I don't think I've seen anything like this
where there's really multiple actors that are working together
and kind of creating this win-win-win
situations between users, delegators, and operators in terms of like generating yield
from different sources for users.
So I'm really keen to really dive deeper into exactly how it works, what makes it unique,
and what makes it appealing for someone who's interested in exploring stablecoins?
Yeah, I mean, I think in general, the guiding principle for CAP is competition.
Most DeFi protocols exist within a vacuum of the team
and what the team can do.
But there are a few protocols that are trying to harness
the benefits of competitive markets.
Obviously Ethereum is a great example, right?
If you want to transact on Ethereum,
if you want to validate on Ethereum,
the last person you're going to talk to is Vitalik, right? And actually some DeFi protocols have started to do the same. So if you
want to build a Morpho market, or if you want to lend a Morpho, the last person you talk to is Paul
from Morpho, right? It's just an open protocol, a smart contract protocol where many different people can interact
based on their own um like personal gains right like they're interacting for their own interests
and that's great because if you assume everybody will act in their own interest you can build
very interesting markets on top of these kind of incentives.
And so that's kind of what we're doing in CAP, right?
We're having all these very high quality institutions
compete with each other to generate yield.
And they're way better than anybody in DeFi at generating yield.
That's why they have hedge funds.
That's why they're asset managers.
That's why they're regulated financial institutions.
And so in any market condition, we'll always have somebody that can generate yield in some strategy.
We might not know what these strategies are.
And so that kind of kind of guiding principle is very important for us.
But then the other side of it is we want to keep users safe because like good DeFi people, we don't trust anybody.
We don't trust these institutions.
We don't trust borrowers, restakers, anybody like this in the long run.
And so how do we keep our users safe?
Well, anybody that can interact with our protocol has to have somebody vouching for them,
somebody covering their activities. And so in any scenario, we know that we can liquidate loans and so protect users from loss.
So I think that's kind of like the big value for both of those sides.
And then for restakers too, the only scalable use case for yields for cryptocurrencies is insurance, right?
case for yields for cryptocurrencies is insurance, right? Because the reality for like Bitcoin,
for Ethereum is that there are not a lot of opportunities for you to do with these assets
because unlike the dollar, they don't have these large economies attached to them. People don't
pay taxes in Ethereum, people don't pay taxes in Bitcoin. And so naturally there are less things
that you can do with these assets. Whereas with the dollar, you can do anything with the dollar.
And so what if you can connect the opportunities of the dollar with the value of Bitcoin and Ethereum?
And that's kind of what we're doing. We're allowing these Bitcoin holders, these ETH holders, the opportunity to underwrite the risk of USD activity in exchange for a cut of that USD activity,
which is incredibly scalable.
It's way more scalable than even the market cap of Bitcoin.
So you can see that as much demand there is
for Bitcoin delegations and cap,
we will always be able to serve as yield for them.
All right, that's super interesting.
I'd love to actually ask a follow up question actually, if that's all right. That's super interesting. I'd love to actually ask a follow up question,
actually, if that's all right. Yeah.
Like from the perspective of a user, right? Like if I'm a DeFi user, which I think is
the biggest, like the largest use case, the most common use case for like, uh, listeners
and on this platform. So like I come to Cap platforms, to Cap's platform platform like i mint my cusd i stake it so i get st cusd what happens with
like can you help us visualize like the journey of that cusd and where it goes and what it does
because i'm getting yield in return right and like i know that there's multiple like cases of
scenario which is like there's a hurdle rate And then there's the yield generating by those activities we've just described.
Like how, how does that get routed?
Like, is there like, is there a front end?
Like how, how, how exactly does that work from like the perspective of your user and
like knowing my yield source?
I think that's a great question.
And this one that we get often, like what is is the lifecycle of a dollar within the cap, right? Well, to make it super simple, when you come to our
platform, you can enter stablecoin one-to-one with USDC and other stablecoins. Instantly,
those assets are put into our idle strategies. So if nothing's going on, if no operators are
borrowing, each asset has an idle strategy to make sure that we're not lowering the APR from idle assets.
So for the money market funds like Benji and Biddle, that's pretty easy.
We have legal agreements with them to share the U.S. Treasuries' yield with us.
For assets like PYUSD and USDC, it's a bit more complicated.
After the Genius Act, we're not necessarily allowed to give yield from stablecoins.
So how do we make yield out of these stablecoins?
Well, we deposit them into over-collateralized lending markets.
Because if you squint, CAP is basically an over-collateralized lending market.
So we think that it's the same risk profile to put it into other markets to get yield
while we're waiting for an operator to transact.
Right now, USDC, for example, we deposited on Aave.
But in the future, we are looking at other integrations we can make.
Obviously, Morpho is a wonderful application to build on top of because we can sort of limit what assets are being used to borrow our tokens against,
which is very important because if you put your stable casino lending market and then
the Dow goes rogue, you might have bad debt scenarios.
And so, yeah, we're definitely looking into more folk.
Now, if let's say a regulated financial institution like Susquehanna comes in and says, well, I can make more yield than Aave.
Let me borrow it from the reserve and the USDC and go make yield off-chain in some scalable track-by strategy.
Well, first they'll have to go convince, let's say, Ether5 to delegate ETH to them to cover their activities.
Then they'll come to us and try to borrow USDC.
Our contracts will check that they have ETH that's vouching for them.
And based on that value, they'll be able to borrow against that ETH.
So it's sort of like delegated credit.
And our contracts will charge them more than we're getting on the idle strategy.
them more than we're getting on the idle strategy. So if we're getting, let's say, four or 5% of the
So if we're getting, let's say, 4% or 5% on the idle strategy,
idle strategy, we could be charging them 8%, 10% on the borrow for the operator. And so everything
else is just like a lending market, right? If a lot of people are borrowing, then the cost of
borrowing will be higher. If user starts withdrawing their USDC, then the utilization will
spike. And so these operators are going to be paying more for borrowing, which will bring about
some repayments.
So that's more or less how the protocol works.
That's very cool.
Thanks a lot for the thorough answer.
I think it's super fascinating and really novel mechanism for stables and yield bearing
stable,
which is really cool.
I have one quick kind of like segue question because we're going to talk about Morpho markets.
And one of the markets that was recently added and listed to Morpho
is not just CUSD and SDCUSD,
but there's also new markets for PTs for those assets.
And so PTs are Pendle tokens for fixed yield.
And so I'm really keen to understand like a little bit of like, why PTs?
Like why first also like create a market on Pendle for and YT's token for SDCUSD?
Well, I think leverage is extremely important, right?
That's how most TVL gets routed to new yield-bearing stablecoins nowadays.
So over 50% of Athena's TVL right now comes from Avin, right, from looping.
And so it's definitely a very important growth for stablecoins like ourselves.
And luckily, our stablecoin is built in a way that we have instant liquidity, right?
You can always redeem it for USDC.
and all the yield activities are fully insured.
And all the yield activities are fully insured.
And so we were able to get on Morpho
thanks to this partnership with both of you guys
fairly quickly, right?
Within a week of launching, we already had an Oracle
and within two weeks of launch, we were already on Morpho,
which speaks to how, you know,
in touch Morpho is with the stablecoin space, right?
They're able to see these new stablecoins coming
and onboarding them into their ecosystem, which is great.
And like you said, yeah, we have a couple of assets, right?
So we have Stakes EOSD, which earns the variable rate
that our protocol can generate for the users.
But additionally, we have these PTs.
What's interesting about PTs is that you get a fixed yield. It's not a variable yield. So you can go to Morpho and essentially sell the right to perhaps your points that you might get from CAP or sell your right to the variable interest that you might receive from 6US USD in exchange for some funds up front.
And that's what they would call like the discount.
And by doing that, by getting that money up front, you're essentially getting a fixed
yield on the asset.
And then by the end of the maturity date, you'll get the full underlying asset back.
So but there's some sort of like delay.
And so in the meantime, what you can do is lever that.
And so if you are earning 15% of PR and the cost of borrowing from Gauntlet is 10%, you're at a 5% surplus every time you borrow.
And so that's been a very successful strategy that a lot of stablecoins have used in the past.
I think there's a difference with CAP, obviously, in the risk profile, right? Since we
have this native insurance and we're redeemable stablecoin. But yeah, it's a high level.
Thanks a lot. And that's a perfect segue into my next question. So thanks for that,
which I think you've kind of started to answer, but I'm keen to understand Alex's perspective on
this, which is like, why would a stablecoin protocol or any protocol for that matters,
want to list a market on Morpho?
And I think Benjamin, you touched on it a little bit,
which is like leverage and composability is important.
Like, yeah, I'm just keen to understand like,
what are the advantages for DeFi participants, for protocols?
Like, why would someone want to list a market on one phone?
And anyone, by the way, any of the other two speakers that are more than welcome to, like, jump in after and add their unique perspective to this?
Yep.
I would actually echo a lot of the things that Benjo already said, but basically the whole shtick of DeFi that, oh, we can make the capital markets more efficient and generally the capital
flows becomes more efficient.
And to take a loan against an yield bearing asset that you already have or any type of
asset that you would prefer to go along, that's something that like you can do on morfo and
basically if we speak about something like blue chip assets i have eth or i have btc and i don't
want to sell that asset but i want to borrow cash against it uh you want to take a loan and you want
to take a loan in the best possible terms but you also want to make sure that like there is, I don't know, enough
liquidity for you to take and that the Oracle is set up correctly.
So you end up having like only very few lending protocols where you can do so.
The market creation on Morphe itself is permissionless.
So technically anyone can create a market when they have a collateral asset, loan asset, they could set up LTV, they could set up the Oracle.
And then there is like interest rate model, which is unified on Morpho, so you can't really change it.
But the market itself is a very like simple set of parameters.
set of parameters. But if we speak about the yield bearing asset and here, especially about
like when we speak about the stable coins, DeFi enables leverage. And this is one of the like key
growth factors for all assets that are growing thanks to leverage. And also it would be a bit more probably on the like DeFi native type of users.
But essentially when you have the LTV that is high enough and the borrow cost is lower than
what is the yield of the collateral asset, you can maximize return of the strategy that you chose to
execute. And then with Morphe, because it's one collateral and one loan.
Normally the LTV could be much higher than if you were borrowing against like multi-asset pool.
So it means that you can take a bit more leverage with a bit better terms.
And when you do it in scale, it's a very like sizable and tangible improvement of the strategy.
I hope this of the strategy.
I hope this answers the questions.
Yeah, this is good. Thanks Alex.
John, Benjamin, anything to add to this?
Yeah, just real quick.
Like I think why launch market on Morpho is via Morpho,
you're able to get listed really quickly compared to any,
most other lending protocols across crypto.
You get trusted diligence and a brand from a top tier curator.
And on top of that, you get access to a significant capital across all these different vaults that can allocate to your market.
And so over time, you know, you can watch with Morpho allows you to move quickest to market.
And on top of that, you know, you get that good brand of diligence.
And you can achieve scale quite quickly to help the protocol get to a lendiness effect as they scale across lending and other areas.
Yeah, and I think that quickness is quite interesting because, I mean, we've all been on forums, right?
I mean, we've all been on forums, right?
We've all played the DAO game before.
We've all played the DAO game before.
And it can be pretty annoying because sometimes, you know, these DAO voters don't have the
protocol's best interest in mind.
If you think about sometimes the amount of investment that these DAO voters have in the
DAO is not equal to the same value they can get from being malicious to
the DAO. So the incentives are definitely not aligned. But when it comes to something like a
morpho, every actor is tied to their decision making. So like if Gauntlet wants to list
something, you know, they will bear the risk of lending or not lending to a new market. And so there's no there's no need to play politics or
or, you know, have these like long forum posts.
All you need to do is speak to, you know, very knowledgeable individuals
like you have, like at Morpho and the other curators and
put your case using logic, not using politics,
case using logic, not using politics, which is very nice from a builder point of view.
which is very nice from a builder point of view.
Awesome answer.
Thanks, Yufri.
Yeah, governance politics can be very entertaining, but it's not entertaining when it actually
affects your protocol and your roadmap.
So I get that makes a lot of sense.
And Alex, actually, a follow-up question.
So now we understand, and we've covered it a little bit.
We understand why a protocol would want to list their assets on like a Morpho market.
Now, practically speaking, like what does the process look like?
So let's say I'm building Simon USD, right?
A new yield bearing stable coin.
And I want to list my yield bearing stable coin and i want to i want to list my uh my my uh my
yield bearing stablecoin on morfo using market like how would i go about it like let's say i
knew no one in the space and i didn't really know where to start like practically were the
steps that i would have to take in order to list my asset on morfo um i feel like I would be wearing my gauntlet hat, a bit of a self-proclaimed member
of the risk managing team. But yeah, technically you can create the market on your own because
market creation on Morpho is permissionless. And again, you should have the idea of what collateral
asset you have. And normally when we speak with asset issuers, they all want to have their asset as collateral. And in most cases, if it's
stablecoin, you would want to borrow USDC or USDT or any like any other non yield bearing
stablecoin against it. If we speak about if it could be something like a new LST, LRT, but then you need to calculate what would be the loan to value ratio that is
safe to worry against. And for example, for like more volatile assets, and it could be some token,
you probably don't want to go on very high LTV because then there is a certain risk introduced with this.
But when it's like a yield bearing stable coin, you assume that the price of this asset can't
really go down. So you can borrow at the pretty high LTV. Then you also need an oracle, which in
DeFi is an essential thing. And that's where a lot of like constraints comes from.
And when you have all these parameters, technically you can create a market on Morpho.
However, this is a very like wide and friendly approach.
And it would create a lot of like riskier opportunities for users if we didn't filter it in any way.
So in reality, in order to be shown on Morpho app front end,
this market needs to be at least in one of the vaults.
And we do like work with the vault curators very close.
So normally the route that we recommend is actually for the asset issuer
to speak with the risk curator and they would be the one who these parameters are correct that oracles are the
right ones that they return the price correctly and also they would monitor these market parameters
at all the time so as an end user it's safe to interact with these markets but also disclaimer
here when i say safe and risk it's not something that is like easily defined.
So everyone probably have, it's like their own definition of these two terms.
That makes a lot of sense.
Thanks, Alex.
And also, again, perfect segue, because I'm about to ask John to follow up on this and kind of talk a bit about like the, like why bring in a curator for like listing markets
on Morpho and also like kind of like,
what is Gauntlet's process for evaluating at new assets
like CUSD, like state CUSD for market listings,
sorry, for market listings, very complicated to pronounce,
and inclusion in a vault allocation book because we'll
talk about it shortly but basically not only is gauntlet um creating the markets for uh cusd and
staked usd but also allocating from different vaults with different risk profiles so uh john
yeah um curators are like the first line of defense for lending on Morpho and in my opinion, for
DeFi over a long enough time frame.
And so the listing process is the most important element of how we do business.
What we do and how we evaluate a product is kind of in some ways very standard and in
other ways unique for each individual collateral.
First of all, we have to look at very much the basics.
Anything you list needs to make sure
it can always liquidate properly
up to the amount of size you're willing to allocate
and ideally for not just ourselves, but for all curators.
We always evaluate the liquidation pathway
to ensure that any depositor into our vaults
that we are taking capital and supplying into these markets um to make sure that they they're always protected
first secondly um to ensure not just liquidation of pathways clean to but to make sure the market
always operates safely to scale for the borrowers for benjamin and cap to continue to like you know
to bring that new capital in is we look at um the design and make sure that the Oracle is designed properly to enable safe, long term, scalable borrowing to bring that market up and keep, you know, get a higher and higher up the borrow front end.
And then kind of the third is reviewing the actual protocol itself.
What is the design?
What are the audits and what are the insurances
the team has put in place to protect users on their protocol themselves? We are lending
against the market. We have to make sure the market is safe. And also we have to look at
the protocol and evaluate as well for safety. For Benton, they've done a really good job
on taking best practices on audits and safety for their users. And this made us a lot more
comfortable working to scale that market and partner with them on this. on audits and safety for their users. And this made us a lot more comfortable
working to scale that market and partner with them on this.
Great answer. Thanks, John.
Ben, why do you pick Gondlin?
Just for like, as a risk creator?
I don't know, Jibby's a great guy.
What can I say?
No, I think it's very clear, you know, who are the serious builders in this space, right?
Like, we have a very large industry now.
It's not how it used to be where you didn't really have too much of a choice of who you're working with.
At the moment, you know, there's just a lot of different teams.
And Gauntlet is a great one.
I mean, they're always on top of things.
And they're one of the largest lenders.
So obviously, that's huge for us.
If we want to loop a lot, we need somebody that can lend a lot.
And so Morph is there.
And like I said, they're just a very professional team.
And so good to work with them.
We appreciate the kind words.
It's great to work with you guys, too.
Speaking of the vaults and the landing part,
actually, John, question for you,
which is like Gauntlet curates several Morpho vaults
on Ethereum with different risk profiles
like USD Prime, Core Frontier.
I think Alex touched on those a little earlier, right?
Can you like, I'm just going to make it a long question,
and then you can take as long as you need to answer that.
It's just like I know it's all, like, interwoven.
Could you, like, explain, like, those different vaults?
How can, like, they work?
And how do, like, assets like staked CUSD and PT staked CUSD,
like, fit into those vault strategies?
What does it mean for vault participants
when those assets get allocated to from these vaults?
Yeah, like in traditional finance,
you know, users are always looking for different yields
based on risk profile.
They evaluate the, you know, when they deposit into something
or they try to acquire, say, high yield credit.
They're kind of evaluating the yield you're getting from that kind of product compared to cross-risk categories and the risk you're taking on it.
We designed three vaults really focusing on trying to build an institutional style credit rating on vaults where we have three different risk profiles of yield.
Prime, Core, and Frontier.
Prime is strictly a vault that allocates strictly to blue chips wrap testes wrap btc cbdc and basically we're trying to make sure
that never ever in an instance where will users ever accrue losses in that vault in any scenario
core is still takes that don't don't risk diligence on how we look at markets and is willing to allocate it to potentially higher yielding markets such as Athena PTs, Resolve products and other products as well.
And how we view that is these yield products, earn higher yield, offer high yield to users.
And then these products are still go through our diligence of being safe, having clean liquidation pathways and strong Oracle design.
of being safe, having clean liquidation pathways and strong Oracle design.
And the third is Frontier, where we still apply.
And I guess the kind of differentiation core is we put allocation cap limits and what we
can expose ourselves to.
So for PTs, we have a percentage limit of what we can expose to PTs.
We have a percentage limit of what we can expose to certain kinds of staples based on
a yielding strategy and protocols, and then also, you know, just any singular market.
And so we really follow those allocation limits strictly on our protocol to make
sure users can get diversified, well-adjusted yield across, you know,
higher yielding products while making sure that, you know, we, they, they are
still like fully protected and, and then frontier goes through the same gauntlet
diligence of anything that would list on any market. are still like fully protected. And then Frontier goes through the same gauntlet diligence
of anything we would list on any market.
However, it's willing to allocate more aggressively
into markets as long as we think they're safe.
For example, like PTs, we could in theory,
be heavily allocated fully into PTs in that vault
without an allocation limit across the vault
or other assets.
And the kind of view pretty much is just
gauntlet diligence, maximum yield.
By having three categories of yield and users can easily digest what they're getting into
and they can easily differentiate and understand what prime means, what core means and frontier
means. A lot of curators are adopting that same risk framework and that same naming because it's
very clear to them this is an easy, to identify and frame their vaults.
And, yeah, it's great to see, like, we're not just pushing the narrative on curation and lending.
We're also pushing the narrative on how we define yields in the space.
How CAP is viewed is we kind of are able to go to LK2 SDCUSD,
both in our core and our prime vaults.
And the reason why is, again,
great diligence on the protocol itself and then very great Oracle design
and then clear liquidation pathways.
CAPS SDCUSD is fully atomic.
And what that means basically on the end of liquidity,
what that means basically is like,
there should never be a situation as long as the protocol operates appropriately where a bad liquidation should
ever occur. How we do the PTs is it still has that clean liquidation pathway. However, in order to
redeem a PT back into the underlying SDC USD, back into USDC, you need to like look at the
on-chain liquidity of the PTYT market.
And so for the PTYT market, as it grows and scales, just recently launched a week ago,
I think, a week and a half ago, we kind of look at the on-chain liquidity.
And we're willing to allocate based on what can liquidate property, not just from the STCUSD,
from the PT liquidity pool as well. And so for the PT, we kind of start off in the frontier.
And as on-chain liquidity grows in the PT,
we'll be trying to look and exploring
in addition to core as well.
And that's kind of how we design it and we kind of build it.
Good protocol, good design, good audits, good Oracle,
fully atomic liquidity, which allows the core vault.
And then with a secondary AMM liquidity on the PT,
we can start with the frontier and as that liquidity scales,
we can then eventually scale it up
in the core vault as well.
Awesome. Thanks, John.
I promise I didn't pay John to say nice things about me,
but I guess we're paying him in interest.
Does that count?
I was about to say, John made me bullish.
I thought I'm not bullish enough.
Yeah, you can only be more bullish now
that's fun um okay so let's uh let's switch gears a little bit um alex i'm keen to understand like
the the the kind of like switching to broader questions and like more like forward thinking questions.
I'm keen to understand like,
what's like Morpho's stable coin growth strategy and how do like novel assets, like cap assets actually fit into that, that,
that growth strategy.
Do you have any, anything to share,
any kind of like interesting metrics,
any kind of like interesting trends you're seeing,
any kind of like interesting trends you're seeing any kind of like data points
or insights um i think i'd be i'd be super curious to uh to know um okay i think there are like two
questions to answer here and first one about having assets like caps table coins as like part of the
general growth strategy and when you think about this from
the perspective of the lender you want to have the like as high yield as possible with as less risk
as possible when you are supplying to the vault but the APY on the land side is what the borrower
is willing to pay for their loans.
And depending on the market that the liquidity is supplied to within the vault,
it's a weighted average of the exposure to these markets.
So naturally you would always want to have some collateral asset with the yield
high enough that the borrow cost is like very competitive.
Um, against blue chip assets, the cost of USDC would be currently at around like 5%. And it means that the lender would be lending their USDC
at like 5.5% with all the rewards on the land side. But maybe I want to have 10% and 10%
is only possible when the borrow rate is sustainable at a higher benchmark.
So naturally you would start to think, okay, what are the good collateral assets in DeFi
that would sustain this higher borrow cost?
And this is pretty much the bull case of having all the yield bearing collateral on Morpho,
including stable coins as a big part of the growth strategy
because you do have borrowers, you have people who are leveraging and they're at the same
time able to pay pretty high borrow cost on their positions.
So this is in terms of the like overall growth strategy.
I feel like in DeFi we can also roughly put the PT in the same pile. And everyone probably saw all these gigantic metrics of Athena PTs
that pretty much a lot of leverage is taken in all these positions.
But this makes the yield on the land side quite attractive.
If we speak about Morpho, I believe that PT markets in collateral
would be something like in the billions.
On the cap USD, I believe that there are already around like 10-15 million borrowed and these are very new markets.
So I hope that it would grow very, very fast. We always are constrained on the supply side for USDC, but to have this high quality collateral
asset that are growing, that are able to scale also grows the liquidity on the supply side.
So in a way, it's a very collaborative growth when the asset itself is growing, the supply in the vault is growing, Morpho deposits
are growing, the risk raisers are having their performance fee. So they're also generating
the revenue on all these assets. So I guess it's a very synergetic relationship and that's why we
actually can call it like good partnership um so yeah let me stop
here that's a great answer um thanks alex um i guess also like broader uh question future forward
thinking to cap what's next what's next recap sorry it's very broad uh but you can go as little
details or as as many as much detail as you'd like. Well, you know, when your protocol that just launched, I think everything's next, right?
We only got the very first thing, which is to be live, to have a protocol that functions and people are using.
I think from here until the end of the quarter, what's going to be important is to onboard all of
our institutions. As you guys can see in our CAP table, we're mostly backed by, you know,
TriFi institutions. And so between now and the next month, we'll see all of them have
an active role in our protocol. And I think that's like the most exciting thing about
CAP is that we're less a DeFi Native Protocol, more kind of rails for
traffic to transact upon. So yeah, long way of saying that's the stuff you'll see. So a lot of
new operators coming online, a lot of new collaterals being added, and obviously more
integrations, hopefully, especially on the Morpho side. I think there's a lot of cool plans that we have ahead.
Awesome. Well, I look forward to seeing the updates. I think we're almost at time.
I'd love for us to maybe take the last five minutes to actually wrap up.
I think if you have any final remarks,
or also what I'd love for each of you to go through
is a little bit of like, okay, this space was okay.
This space was good or I enjoyed learning about these different dynamics and this new
protocol.
And where do I go next?
Where do I go to learn more um like any kind of
like resources you want to share any kind of like link you want to point like people to um obviously
like you know give each of those uh amazing people a follow uh give each of those brands follow um
but yeah like just final remarks and also if you get a little bit of an alpha uh or a little bit
of an announcement to make like this probably uh this is probably the time if you don't that's absolutely fine uh but
yeah just uh just closing remarks would be uh would be great uh let's kick it off let's kick
it off with uh with john if you have any uh any final remark and then we'll go alex and then
we'll uh we'll cap it off with cap i guess yeah um Yeah. First, I'd like to say
I know if you're ever on Twitter or you're on Crypto World,
you always see people
having a lot of FOMO for projects.
And you never know if the FOMO is real, if it's interesting.
And as you get more matured in the space, you feel like everything looks the same.
One thing I would say is like caps have a lot of FOMO and I think it's actually well deserved.
I think they're really pushing the limits of what DeFi can be and how it can merge TradFi and DeFi.
And we're already kind of seeing this play out with various, they're already allocating
and people are earning yield and competing for yield under the hood on cap on not just capital
is being put in total reserves. And what's interesting is we're going to watch the strategy
start out probably quite simple. And then as people see an opportunity to get new capital,
we're going to watch the yield strategies under the hood on cap become quite complex and um and while still being having some level of risk management
because it's being done by strong trad fi actors or well-known d5 actors and so what i would say
is like i think it's one of those interesting projects where it's it's it's something i think
we can get really excited about of what it can be what it can be, what it can unlock, and what it can do.
And I'm really excited for Ben and his team.
Ben is probably one of the most successful founders I've ever interacted with.
And it's really great to work with a guy like him and his team.
They're all really great, really humble guys.
And at Gauntlet, we're really excited to work with these guys and build a deeper relationship with them via Morpho, via Cap, and other whatever areas we do as well.
This is a really exciting project.
And, yeah, I think Gauntlet's really, really excited and proud to support this.
Thanks for such kind words, man.
I think, honestly, we're also very happy to work with both of you guys.
Gauntlet's, like, such a big risk manager in the space and Morpheus, one of the largest lending markets.
So it's no small thing for a young protocol like ourselves to be partnering with such giants from the get go.
I think I actually have a good story.
Last year when we were in Bangkok, and I think it was very first time when Benji mentioned
CAP and that they are like building it.
I have a now artifact, CAP CAP, that was given to me at that conference and now to see cap getting the flywheel growing so like fast
this is something that is like incredible to witness and us as morphe it's always very humbling
to know that okay you can actually contribute to the growth of this project so excited to see what cap is cooking what are they executing it's always nice to see
friends winning um for gauntlet i think i'm excited to see you guys to have more and more assets under
management uh you just hit a bill recently so hopefully it will keep scaling keep growing
parabolic from here um for more for it's not really an alpha, but this is something that we are working very,
very hard on.
And it's Morpho V2, which would be live soon.
It will enable fixed term, fixed rate borrowing.
And this also should contribute very heavily to the growth of the protocols and to make
the life of borrowers way, way easier.
But this is for the next probably six months.
So please follow our journey along, follow the growth of CAP, follow the growth of Gauntlet.
And I'm sure that there would be a lot more wins to celebrate for us in the nearest future.
Awesome.
Thanks, both.
Ben, do you have any, I was about to say any last words.
Oh, I feel like I've yapped a lot in this space.
Thanks for giving us the platform to talk about CAP.
And if you want to learn more, the URL is simple, is cap.app.
And so you can find anything there,
use the platform.
It's pretty easy.
You just met this table.
Yeah, keep posted for new updates from us.
Awesome.
And also, since I'm the marketing guy at Gauntlet,
I have to mention,
we have a resource called the Vault Book,
if you're more interested about Vault Creation. John, next time, don't forget to mention it.
I will remind you.
If it makes you feel better, after I said what I said, I'm like rats, I forgot to show
the Vault Book.
Thanks, everyone who joined. Thanks, Alex. Thanks, Ben. Thanks, John. It was a really
great chat. This space will be recorded and probably clipped a bunch.
So keep an eye on the platforms for the upcoming clips.
And if you missed the beginning or missed the end or missed any part of it,
you will get the recording.
We will share it or you will see it.
I think it's automatically done.
But anyway, I had a great time hosting this.
So thanks a lot to all the speakers.
Thanks a lot to all the listeners.
I'm sorry I didn't get a time to get an audience question,
but if you've got any question, just simply like just thread,
and I'll promise you I will chase the person
that will give you the best answer down
to actually get you that answer.
Thanks, everyone.
Hope you have a great rest of your days,
whatever time it is, and wherever you are, and see you next time on another Spaces. Thank you.
