Applicant information
Name: Steakhouse USDC MetaMorpho
Vault: Morpho Blue | Earn
Key Information:
- $50m TVL currently in vault, $1.7b+ TVL on Morpho Blue
- Steakhouse Financial is the largest curator of Morpho vaults with no record of bad debt accrued
- Blue-chip Morpho Blue vault with only wBTC, wstETH, and Treasury Bills as collateral
- Aragon DAO Guardian with 1 week time lock on all composition changes puts the lenders fully in control
- The vault is permissionless and open to anyone who supplies USDC.
Expected APY: 0.91% to 31.19%, stabilizing the last few months around 5.5% (full history here), plus additional $MORPHO tokens
| Product | 90 Days | 30 Days |
|---|---|---|
| SteakUSDC | 7.16% | 6.23% |
| SteakUSDT | 7.60% | 7.33% |
| AaveUSDC | 7.00% | 6.42% |
| CompUSDC | 6.83% | 6.68% |
Underlying asset(s): USDC loan; overcollateralized by wBTC, wstETH, and Treasury Bills, depending on the crypto lending and Treasury Bill lending environments.
Minimum/Maximum transaction size: No minimum and has ample room for maximum this initiative allows for.
Current AUM for asset: $50M TVL currently, $1.7b+ TVL on Morpho Blue
Instant liquidity: $13M as of writing
Volume metrics: Above TVL acquired in ~6 months
Other stablecoin vaults are also available on Mainnet:
- Steakhouse PYUSD: Morpho Blue | Earn
- Steakhouse USDT: Morpho Blue | Earn
Proposal Summary
Brief outline of the requested allocation of Ethena’s Reserve Fund to your asset/product and benefit to Ethena
The Steakhouse USDC MetaMorpho Vault is a blue chip collateral vault created on the permissionless risk curated vault protocol Morpho Blue. The collateral consists of only wBTC, wstETH, and bIB01 (tokenized T-bills backed by Blackrock’s iShares 0-1 yr US Treasury ETF). The vault is curated by Steakhouse Financial, and currently has around $50m in TVL, the largest independent vault on Morpho.
Morpho vault’s have undergone multiple smart contract audits. Steakhouse vaults have on-chain Aragon DAO Guardians that put depositors fully in control with no trust assumptions. Users of the vault can veto critical actions and protect themselves from malicious activities, as well as a 7-day time-lock for all changes. The vault’s objective is to expose users to risk-minimized on-chain lending activities. We run autonomous off-chain reallocation bots that optimize for lending activity, balancing liquidity and optimized rates for borrowers and lenders.
Basics and background
How will this allocation improve the diversification or capital efficiency of Ethena’s Reserve Fund and/or backing assets?
Ethena’s Reserve Fund has as its main objective to provide a surplus buffer against any potential drawdowns in Ethena’s strategies. In order to maximize its effectiveness, it should be desynchronized from Ethena activities. Holding it in stablecoins, such as USDT, is a good first step and achieves a substantial part of the objectives as it relates to diversification. However, holding stablecoins themselves are not devoid of risk entirely and Ethena should strive to earn yield at least equivalent to the underlying stablecoin backing to maximize capital efficiency.
To solve for increasing capital efficiency while maintaining a comparable level of risk, allocating to Steakhouse USDC’s MetaMorpho vault is a good first step. Steakhouse USDC is an ERC-4626 trust-minimized on-chain lending vault that offers diversification from Ethena’s strategies and competitive rewards for a comparable level of risk relative to holding stablecoins.
From Dialectic’s Risk Matrix, which we use in our report “Benchmarking and Performance Attribution for DAOs” (Steakhouse Financial), we describe the following vectors of on-chain allocation risk. Our own self-assessment of steakUSDC is on the conservative end of this matrix:
| Dialectic Risk Matrix | ||
|---|---|---|
| Smart Contract | Moderate, Live for < 2 years without incident | |
| Economic | Null+ | Exposed to USDC, a regulated stablecoin and with idle-market liquidity buffers managed algorithmically through off-chain reallocation bots. Exposed to blue-chip, highly liquid collateral with constrained risk of depeg |
| Bridge | None | |
| Oracle | Null+ | Underlying markets rely on Chainlink oracles |
| Governance | Null | |
| Audit | Null | Extensively audited and formally verified (here) |
Therefore, for a comparable level of risk relative to holding a stablecoin earning 0%, Ethena’s Reserve Fund could increase its efficiency by using steakUSDC to provide additional rewards without compromising on liquidity. Users are free to withdraw at any time with no waiting period. Asset exposure is limited to a few select blue chip tokens. Morpho’s dynamic reallocation mechanism allows for swift adjustments based on market conditions. Our allocation algorithms optimize for best sustainable performance while avoiding liquidity traps and we have never had a liquidity trap situation when 100% of the vault assets have been borrowed.
Our vaults charge a 5% fee on borrows as fees, which compares favorably to major DeFi lending venues where such spreads can reach 20% or higher.
Please describe any experience your firm has in working with decentralized organizational structures
Our team started at MakerDAO and has supported the protocol on its path to becoming the world’s largest decentralized stablecoin and a major catalyst for RWA innovation in the space, with over $2b allocated in real-world assets, including US treasuries. Since then, our team has also made significant contributions to other major DAOs such as Lido, ENS, Morpho, Arbitrum, etc. We developed Lido DAO’s minimalistic Treasury Mangagement Principles to ensure a trust-minimized protocol surplus. We report on the performance of ENS’ Endaoment through on-chain, auditable, Dune queries. We participated in Arbitrum’s STEP committee to allocate part of Arbitrum’s treasury to on-chain real-world assets and currently serve as its program manager.
Additionally, we have been instrumental in advisory roles for multiple stablecoin and related projects, including Angle, Mountain Protocol, or Venus, whose stablecoin, VAI, we re-pegged in less than three weeks.
What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?
Steakhouse Financial Ltd is not a financial advisor and does not manage capital directly. We go out of our way to put lenders in control of our vaults through on-chain DAO mechanisms. This is not only aligned with our permissionless ethos, but we strongly believe it makes it a more useful product for users as a financial primitive.
This value has been recognized by other protocols that have incorporated steakUSDC as a core piece of infrastructure, including Angle Protocol (steakUSDC is a core part of the CDP engine for USDA and our EUR-based vaults for EURA), Reserve Protocol or AragonX.
Projects we contribute to as front-office finance teams are the largest in DeFi, including Lido, MakerDAO and others, with well over $40bn in TVL.
Legal design
Do holders of your product have any shareholder, investor, creditor or similar rights?
Steakhouse USDC is a trust-minimized, pure DeFi product, with no corresponding legal rights or responsibilities.
Describe the legal and contractual structuring for your product, specifically naming any regulatory bodies overseeing the product, if applicable.
There is no contractual agreement between depositors and Steakhouse. Steakhouse is not liable for anyone’s deposits and there are also no lockup or deposit contracts between the parties.
Again, all deposits into the vault are permissionless and there is no onboarding required. This is a pure Defi product; the lenders remain in control and there are minimized trust assumptions.
How would the proposed allocation be treated in a bankruptcy or insolvency situation?
A situation where bad debt could accrue to lenders is possible, but unlikely. For this to be the case, in a situation of market volatility, borrowers would have to be unable to repay their loans and liquidators would have to be unable to secure collateral at a discount. Mitigants to this are that we maintain a regular allocation to an idle market and our collateral selection focuses on blue-chip tokens with extremely high liquidity that are very attractive to liquidators in any, and especially in, adverse market conditions.
If Steakhouse were to go bankrupt, the vault would continue working as normal. If we ceased running allocation bots it would revert to an ‘aggregator’ of Morpho Blue markets, where liquidity would depend on borrower repayments.
Smart Contract/Architecture
How many smart contract audits have been completed with respect to your tokenized product? Please name the auditors and provide a copy of reports.
MetaMorpho Vaults and the underlying Morpho Blue markets have been audited and formally verified. A full list can be found here.
Is the asset/product permissioned? If so, how are you managing user identities? Any blacklisting/whitelisting features?
The Steakhouse USDC MetaMorpho Vault is permissionless and open to anyone who supplies USDC. There are no blacklisting/whitelisting features for this vault.
Is the asset/product present on several chains? Are there any cross chain interactions?
This vault is on Ethereum. We similarly curate vaults for PYUSD, USDT and other loan assets on Ethereum mainnet. Instances of the protocol and similar Steakhouse vaults are also live on Base.
Are the applicable tokens being used in any other protocols? Please describe the various components of the ecosystem.
Steakhouse USDC is integrated as lending infrastructure on numerous DeFi platforms:
- Angle Protocol
- Superform
- Idle Finance
- Reserve Protocol
On-chain companies and DAOs use it as a treasury reserve for many of the reasons outlined above, including AragonX, Bankless and, of course, Steakhouse Financial Ltd.
How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?
The Steakhouse USDC MetaMorpho Vault has distinct roles that help govern it:
- Curator and Allocator (Steakhouse, 2-of-3 multisig): Responsible for curating the vault and making key decisions. Manages the allocation of funds to various markets
- Guardian (Aragon DAO, 7 day timelock): All changes made to collateral reallocations and curation can be vetoed by vault holders using a trustless, on-chain Aragon DAO as guardian
Is there any custom logic required for your token/product? If so please give any details.
No, it is a standard ERC-20 with the ERC-4626 extension.