Manager Lending
Managers lock up their depositor's $brktETH to get USDC to generate additional yield
Users deposit $brktETH into Strategy Vaults so managers can attempt to generate ETH+ returns. The manager wants to maintain ETH exposure at all times. Therefore, managers lock up their $brktETH as collateral and take a USDC loan against it. Locking up $brktETH is already giving them ETH exposure plus the block rewards for $brktETH. The USDC allows them to now generate the extra "+" on top of that.
The manager is charged an interest rate for this USDC loan, so their job is to generate a return that exceeds the interest rate they are required to pay.
Enhanced Morpho Blue Pools
We are launching multiple services on top of Morpho Blue Pools. These services will allow us to utilize the audited and proven infrastructure of Morpho Blue for holding the majority of the funds securely and enforcing liquidations to keep our USDC lenders safe.
The $brktETH deposits will come from the strategy vaults. The USDC deposits will need to come from other users who would like to earn a superior yield to what is currently offered in other lending opportunities such as other Morpho pools or Aave. We will refer to these Competitive Lending Markets as "CLMs".
The Morpho Blue pools can only have one loaned and one borrowed paired collateral type. In our case the pair will be $brktETH for USDC. The $brktETH will be the collateral and earn no extra yield from supplying, and the USDC will be borrowed and earn a yield.
The enhanced services in our use case are the following:
We attempt to never have unproductive USDC, so either the USDC is used within manager lending at a superior interest rate to CLMs, or it's invested in CLMs. This ensures that our USDC depositors are getting a minimum of the CLMs rate at all times, so they are always better off by depositing within Bracket as compared to the CLMs.
Because the Bracket Protector has access to the loaned funds, we have the ability to manage our LTV much better than Morpho Blue, as detailed in Collateral Management.
In order to provide these value added services, we need to have the Manager Lending contract have the ability to direct the funds. Therefore, the users will deposit their USDC into our Manager Lending contract and then that contract will manage those funds. Our Strategy Managers will similarly also deposit their $brktETH into that contract.
The Morpho Blue pool will be used to hold the assets when a $brktETH to $USDC loan is made. The Manager Lending contract will be responsible for:
Accepting USDC and $brktETH deposits.
Managing the withdrawal queue for USDC and $brktETH.
Taking out the Manager Loans via the Morpho Blue pool when needed.
Adjusting and rebalancing the collateral within the Morpho Blue pool to ensure all USDC is kept safely over-collateralized, and controlling the order of liquidation to attempt to not have $brktETH liquidated as described in Collateral Management.
Moving USDC between the various CLMs to maximize yield for the underutilized loan utilization amount.
Collateral Management
Within all CLM markets, they assume when a loan is made the CLM no longer has any access to the loaned funds and their only remedy to reduce a high LTV is to liquidate the collateral. This is not the case with Bracket as the Bracket Protector maintains control over the loaned funds and can liquidate them when needed, instead of liquidating the $brktETH collateral. This also means that our effective LTV is much lower than Morpho Blue relieves because we have excess additional collateral.
Managers will be alerted in time to reduce their LTV if it's getting too high, if they are unable to do that in time, their LTV will be forcibly reduced by liquidating assets and paying back the USDC loan.
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