Yield bearing Reserve
Leveraging Yield-Bearing Stablecoins in Own Protocol
Introduction
One of Own Protocol’s most powerful features is its ability to integrate yield-bearing stablecoins like aUSDC (from Aave) or cUSDC (from Compound) as reserve tokens. This enhances capital efficiency and allows users to offset interest costs using DeFi-native yield.
This feature is a showcase of DeFi composability at its best — combining synthetic asset exposure with passive yield generation.
How It Works
When minting synthetic asset exposure in Own Protocol, users deposit:
A deposit amount (e.g., in aUSDC)
Additional collateral (also in a yield-bearing token)
While the user pays a floating interest rate to LPs (e.g., 9% annually), their deposited stablecoins continue to earn yield (e.g., 6% via Aave or Compound).
Example:
User pays 9% annual interest to LPs
Their reserve token earns 6% annually from Aave
Net cost of exposure = 9% - 6% = 3% annualized
This 3% effective cost is comparable to traditional mutual fund fees, but with:
No intermediaries
Real-time exposure tracking
Onchain, composable access
Why This Matters
This mechanism makes Own:
More attractive to users: Lower effective cost than most synthetic platforms
More efficient: Capital is never idle
More interoperable: Any yield-bearing stablecoin can be integrated
It also aligns with Own’s vision of:
Creating systems that do more with every dollar deposited
Offering synthetic exposure that’s not just cost-effective, but yield-aware
Supported Yield-Bearing Tokens
Own Protocol is designed to support multiple sources of reserve yield:
Aave aTokens (e.g., aUSDC, aDAI)
Compound cTokens
As long as the token maintains 1:1 price stability with the underlying stablecoin, it can be used.
Design Philosophy
Most DeFi protocols treat collateral as dead weight. Own flips this model:
Your reserve tokens keep earning yield
You gain asset exposure without full capital cost
You retain DeFi-native composability and flexibility
This model rewards users for choosing protocols that integrate smart money flows over static deposits.
TL;DR
Yield-Bearing Reserves
Use aUSDC, cUSDC etc. as deposit tokens
Net Fee Reduction
Offset LP interest cost with yield from reserve token
Example Outcome
Pay 9% to LP, earn 6% from Aave → net 3% annual fee
Composable Finance
Use ERC-4626 vaults to integrate with other DeFi primitives
Capital Efficiency
Keep deposits productive while gaining synthetic exposure
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