Manager Lending
Managers lock up their depositor's brktETH to generate additional yield.
Managers lock up their depositor's brktETH to generate additional yield.
Users deposit brktETH into Strategy Vaults so managers can attempt to generate returns. The manager wants to maintain ETH exposure at all times. Therefore, managers lock up their brktETH as collateral and can either utilize the LSTs directly or borrow against them to maintain long ETH exposure. Locking up brktETH (or underlying collateral) is already giving them ETH exposure plus the block rewards for brktETH.
In the case the LSTs are used as collateral for on-chain lending, the manager is charged an interest rate for the loan and must generate a return that exceeds the interest rate they are required to pay.
Bracket has approved three primary lending facilities for managers, AAVE, Compound, Morpho Blue. These facilities should have sufficient depth to borrow against LST collateral if required. Managers must monitor and manage their positions in order to avoid liquidation as well as generate a positive return. These protocols are whitelisted by default.