Swell x Sturdy: Leveraging LSDs

3 min readNov 28, 2023


About Sturdy V2

Today, users who want to earn passive yields by lending in DeFi have two options. On one end are permissioned pooled lending protocols (like Aave) that enshrine collateral assets at the protocol level and offer all users a single risk-reward profile. These protocols use governance processes to onboard new assets, forcing them to be conservative, given that all users are exposed to every collateral asset. On the other end of the spectrum are isolated lending protocols. Isolated lending offers permissionlessness and sovereign risk management at the cost of liquidity fragmentation and reduced lender UX.

Sturdy V2 uses a novel architecture to offer users the best of both worlds: no more having to choose between permissionlessness and deep liquidity. Sturdy is composed of two layers, with siloed lending pairs at the base layer and aggregators on top to unify liquidity.

Sturdy’s siloed lending pairs operate as mini-lending markets, with a single lending asset and a single collateral asset, while aggregators deploy deposited funds to whitelisted siloes. Aggregators are Yearn V3 yield optimizers that autonomously reshuffle deposited funds according to the yields of the various whitelisted siloed lending pairs. Both siloed lending pairs and aggregators are permissionless to create and immutable.

This design is especially conducive to enabling projects to create their own lending markets. Currently, projects that want money markets for their assets must choose between drawn-out, requirement-laden governance processes and isolated lending with liquidity fragmentation. Sturdy enables anyone to create a money market in hours that’s liquid from Day 1 thanks to aggregators.

About Swell

To kick off the launch of V2, Sturdy is partnering with Swell to enable the use of swETH, Turbo swETH, and Pendle swETH LP tokens as collateral!

Swell has quickly become a power player in LSTfi. The protocol has already amassed almost 50,000 in staked ETH and placed security first with audits from top-tier firms such as Sigma Prime and Proof of Reserves from Chainlink. Swell has outpaced other LST protocols due to its ability to provide seamless, high-yield user experiences with various uses for their LSTs built natively in their dApp, as well as its dedication to the Ethereum network by helping to further diversify the liquid staking market.


From launch, Sturdy V2 will feature ETH lending silos with swETH, Turbo swETH, and Pendle swETH LPs as collateral, enabling users to lever up and earn leveraged yields with low liquidation risk. Turbo swETH is a vault hosted by Sommelier that provides liquidity to Uniswap v3 swETH-ETH pairs due to the vault’s potential to capture sustainable real yield. Based on current yields, users would earn >100% APR with leverage!

Additionally, there will be an aggregator that distributes funds to these silos for users who want to earn passive lending yields on their ETH. Depositors will also earn Pearls, which will be redeemable for SWELL tokens at the end of Swell’s Voyage airdrop campaign.

The release date for Sturdy V2 will be announced soon. In the meantime, be sure to check out opportunities to earn with Swell here!

Sturdy V2 introduces isolated lending with pooled liquidity, powered by Yearn V3 and zkML.

Sturdy enables anyone to create a liquid money market for any token. Sturdy uses a novel two-tier architecture to isolate risk between assets while avoiding liquidity fragmentation. The base layer consists of risk-isolated pools; aggregation built on top enables lenders to select which collateral assets can be used as collateral for their deposits.

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The first DeFi protocol for interest-free borrowing and high yield lending.