How do lenders earn on Recoup?
Lenders earn 25% of every harvest of bond yield, paid as a rising share price in the lender pool.
Recoup, a self-repaying loan protocol on Base, lends USDC against DexFi Treasury Bonds and charges no interest. The bonds' yield is split by the harvest: 55% to borrowers' debt, 25% to the lender pool, 10% to the insurance fund and the rest to the protocol.
The pool is an ERC-4626 vault, a common standard for pooled deposits: you deposit USDC and get shares, each worth a slice of what the pool holds. When the lender share lands, each share is worth more. That rising share price is the payment; there is nothing separate to claim.
Earnings depend on how much DexFi's treasury pays and how much of the pool is lent out. Idle USDC earns nothing and spreads the yield across more shares.
Is there a fixed rate?
No. Lender yield is not fixed and not promised.
Fund payouts rise and fall, and some weeks pay nothing. Once the pool has a record of weekly payouts, Recoup will show only what lenders actually received over recent weeks: history, not a promise.
What could I earn under my own assumptions?
Recoup promises no lender rate, but you can work out what a deposit would earn in dollars, and as a rough APR, from numbers you choose.
Your assumptions, not a forecast
Recoup promises no lender rate. This works out a rough one on numbers you can change: lenders receive 25% of the weekly yield on every bond deposited in Recoup's vault, with a loan against it or not, shared in proportion to what each has deposited. It opens on an example deposit and the trailing yield; the pool's two figures are yours to fill in.
What you would put in. $100 to start with, as an example.
Prefilled with the trailing 12 weeks (weeks starting 13 Aug to 29 Oct): $0.23 per bond per week on average, a year of it as a share of the $29.79 oracle NAV a bond is lent against (6 Oct). History, not a promise. Change it to your own.
Your guess, up to 85%: the pool keeps 15% of its book in cash, and cash earns nothing.
Your guess, from 10% to the 25% most a loan can open at. The bonds behind the loans are worth the debt divided by the LTV, so a lower LTV puts more yielding bonds behind each dollar lent. It stops at 10% because below that the answer grows without limit as the LTV falls.
Fill in your deposit, the share of the pool lent out and the average LTV, and the arithmetic appears here.
If more lenders deposit and borrowing stays the same, less of the pool is lent out, and the same yield is spread across more deposits: this figure falls with the share lent out.
Lenders can lose part or all of a deposit. Read the six risks below.
What this leaves out
- Only the lender share is counted. Borrowers' 55%, the insurance fund's 10% and the protocol's 10% never reach lenders.
- Borrowers pay no interest in this version, so the bond yield is the pool's only income.
- Each harvest's lender share is released into the share price over the time it took to earn, at least a week. Leave early and you forfeit the part not yet released.
- You buy shares at the current price, so yield already released belongs to the lenders before you.
- Losses: a bad loan the auction and the insurance fund do not cover comes off the share price of the whole pool, and a DexFi failure could cost most or all of a deposit.
- The fund's payouts rise and fall, and some weeks pay nothing. In 3 of the last 12 weeks it paid under DexFi's advertised 25% floor, at DexFi's fund price of $26.68.
- The bond yield is a share of the oracle NAV, not DexFi's fund price, because the LTV is measured at the oracle NAV. The newest week of the prefill is provisional until the fund's next top-up lands.
- Bonds deposited with no loan against them pay lenders too. The prefilled LTV counts every bond in the vault; an LTV of borrowers alone leaves those bonds out, and the figure is then a floor.
- The prefilled figures are the pool and the vault as they are now. Borrowing, deposits, the NAV and the yield all move, so they describe today, not the weeks you would be in the pool.
- Not modelled: cash held back for withdrawal requests, an LTV that moves as the NAV moves and as yield pays debt down, and rounding.
What can lenders lose?
Lenders can lose part or all of their deposit, and there are six specific ways it can happen.
- DexFi custody risk sits with you, the lender. Every loan is backed by DexFi Treasury Bonds, a custodial product the DexFi team controls. If DexFi fails or will not redeem, the collateral may be worth little or nothing. Borrowers keep the USDC they borrowed. Lenders lose.
- Losses are socialised. If the auction and the insurance fund do not cover a bad loan, the shortfall comes off the share price of the whole pool. Every lender pays a slice, whichever loan failed.
- A larger withdrawal needs a request. Only the pool's idle cash can be withdrawn instantly. For more, you file a request and wait for cash to return. There is no promised service time.
- A liquidation marks the pool down straight away. In the launch pool, a loan going to auction or workout marks the exit price down by the expected loss at once. You can still leave, but not ahead of the loss, and new deposits cannot buy the discount.
- Yield arrives gradually, not in a lump. In the launch pool, each harvest's lender share is released into the share price over time. Leave early and you forfeit the unreleased part, and you can get back less than you put in.
- Yield is not fixed. No rate is fixed or promised. Once the pool has a record of weekly payouts, Recoup will show only trailing realised yield, and it can fall to zero.
How do withdrawals work?
You can withdraw instantly only from the pool's idle cash; anything larger needs a withdrawal request, and there is no promised service time.
Most of the pool is meant to be lent out. It aims to keep about 15% of its book in cash, a target, not a guarantee. The rest returns only as borrowers repay and weekly yield arrives.
Withdrawals past the instant amount work like this:
- Each wallet can hold one request for more than the instant amount, with a receiver fixed when the request is filed.
- Each request is quoted a cash floor when filed, and earlier requests are served first, ahead of later ones and of instant withdrawals.
- The wallet, or an operator it approves, chooses when and how much to service, and the receiver then claims the USDC.
- A floor is not a guarantee. If USDC leaves the pool other than through its own payments, the floors can exceed the cash left, and that cash can stay locked for every queued lender until a borrower repays or a request is cancelled.
What happens to lenders when a borrower is liquidated?
The pool marks its share price down straight away by the loss it expects, and lenders absorb any part of the loss the auction and the insurance fund do not cover.
A borrower above 50% LTV can have their whole position auctioned, and the proceeds repay the pool. If nobody bids, the bonds go to a workout, and after 14 days anyone can force any debt still owed to be written down as a loss. If a recovery beats the pool's estimate, the difference goes to whoever is still in the pool. See how liquidation works.
Can I lend today?
Yes, on the Lend page. The lender pool, which funds every loan, is open to outside deposits up to a deposit cap that counts Recoup's own capital in it, which Recoup's governance timelock sets by hand, each change public for 48 hours before it takes effect.
33Labs has audited the pool's source and verified its fixes. The review did not cover the contracts that lend from the pool, price its collateral or run its auctions (scope).