Rehypothecation

Ironclad features an integrated lending market, automatically making collateral available to borrow externally. This facilitates a constant, integrated yield source for Ironclad and iUSD.

When collateral is deposited into Ironclad to mint iUSD, it is made available on the Ironclad lending platform to earn interest from market participants seeking to borrow volatile assets.

Borrowing from the lending protocol requires collateral and Ironclad facilitates liquidations to protect the collateral of iUSD and Ironclad users.

One potential drawback is that if lending protocol utilization is high, iUSD borrowers who repay their debts may not be able to withdraw their collateral for short periods of time. This is managed by maintaining a reserve within Ironclad (<100% allocation to the lending market) and further offset by the high interest rates associated with high utilization and is typically mitigated by yield-seekers depositing into the lending platform, or borrowers repaying their high-interest loans, making collateral available.

The rehypothecation engine is isolated and extremely well-audited and battle-tested by Ethos Reserve and the Cod3x.

If you still have any questions, please reach out to the Ironclad team in our official Discord.