Sturdy is the first DeFi lending protocol to offer high yield deposits and interest-free loans.
How does Sturdy work?
Users can interact with Sturdy in two ways:
- As ‘depositors’ who supply assets like USDC they’d like to earn interest on
- As ‘borrowers’ who borrow assets like USDC and provide assets like ETH as collateral
Sturdy stakes the collateral provided by borrowers to earn yield. For example, if a borrower deposits ETH as collateral, Sturdy stakes it in the Ethereum 2.0 Beacon Chain via Lido.
The yield generated from collateral is used to provide interest to depositors. As a result, borrowers never have to pay interest.
- Alice deposits 100 USDC to the protocol
- Bob provides .05 ETH as collateral and takes out the 100 USDC Alice has deposited as a loan
- Over time, Bob’s debt remains constant and Alice’s balance grows
Here’s what happens under the hood:
- When Bob provides his ETH as collateral, Sturdy stakes it via Lido, converting it to .05 stETH (a yield-bearing version of ETH)
- Thanks to Lido’s mechanics, stETH rebases to a new balance of .06 over time
- Sturdy swaps the yield of .01 stETH to 40 USDC. The yield is distributed such that Alice’s balance increases to 140 USDC
- Bob can repay his debt at any time. He can then reclaim his collateral as either stETH or ETH
- When Alice withdraws her deposit + interest, she pays no fees except for gas
What makes Sturdy different from existing lending protocols?
Most protocols lend out collateral to other borrowers. This is suboptimal for two reasons:
- The assets most commonly used as collateral tend to earn very low yield
- This creates systemic risk; if collateral needs to be liquidated but is being lent out, the liquidation can’t occur and the protocol might not be able to pay depositors back
By staking the collateral using vetted third-party protocols, Sturdy boosts yields while eliminating interest rates for borrowers.
As a borrower, why should I use Sturdy?
Most lending protocols make you pay interest, increasing your debt.
With Sturdy, you pay no interest fees, deposit fees, or withdrawal fees: just gas.
As a depositor, why should I use Sturdy?
With Sturdy, yield is derived from staking rewards, which is a more stable and consistent income than interest paid by borrowers.
How does Sturdy make money?
We take a small portion of the yield generated by collateral.
What assets will Sturdy support?
At launch, we plan to support USDC + Dai for deposits / loans and ETH for collateral. Over time we will be adding more assets.
How can I learn more?
Join our Discord!