# Credit Layer

The CurveYield Credit Layer increases capital efficiency by supporting lending and borrowing markets for productive collateral.

The core opportunity is yield-bearing collateral. Many DeFi lending systems accept assets primarily based on price and liquidity. CurveYield focuses on assets that may also produce income while serving as collateral: vault shares, yield-bearing LP tokens, liquid locker tokens, boosted staking derivatives, yield-bearing stable assets, and other productive positions.

A user may hold a productive asset, borrow against it, and redeploy borrowed liquidity into another approved route. Conservative use can improve liquidity and capital usage. Aggressive use can create higher capital-efficiency opportunities while magnifying liquidation, oracle, slippage, and borrow-rate risk.

## Design goals

The Credit Layer is designed to:

* let users access liquidity without fully exiting productive positions;
* create lending interest revenue for depositors, cyUSD liquidity systems, or approved treasury routes;
* support yield-bearing LP tokens and vault shares as collateral where pricing is robust;
* let the CurveYield treasury deploy stable liquidity into lending markets where risk policy allows;
* support strategy routes that combine vault yield, LP yield, borrowing, compounding, and incentive capture;
* give partner protocols a path to lending markets around their productive assets.

## Integrated lending systems

CurveYield can use different lending systems for different assets and risk models.

Potential and developed integrations include:

* **Euler-style markets** for isolated lending routes and collateral-specific borrowing;
* **Morpho-style markets** for isolated collateral/loan pairs and strategy-specific borrow liquidity;
* **f(x)/fxMINT-style systems** where minting, leverage, or yield-bearing stable assets fit the collateral model;
* **LlamaLend-style markets** where isolated market design and soft-liquidation mechanics are appropriate;
* **CurveYield cyUSD markets** where CurveYield supplies stablecoin liquidity, earns lending interest, and manages peg/liquidity infrastructure through approved risk controls.

Each market is evaluated independently based on collateral type, borrow asset, oracle route, LTV, liquidation model, liquidity source, withdrawal path, and public status.

## Yield-bearing collateral

Yield-bearing collateral introduces accounting requirements that simple collateral does not.

Important collateral details include:

* underlying asset;
* yield source;
* accrual method: price-per-share, rebasing balance, reward claims, or external accounting;
* pricing route;
* liquidation liquidity;
* vault, gauge, bridge, pool, or external strategy dependencies;
* withdrawal delays, penalties, or liquidity constraints;
* cross-chain rate update dependencies.

Examples of collateral categories CurveYield may support include:

* ERC4626 vault shares;
* IPOR PlasmaVault shares;
* CurveYield pool BPT;
* Curve or Balancer-style LP tokens;
* StakeDAO and Convex liquid locker assets;
* yield-bearing BTC or ETH wrappers;
* yield-bearing stablecoin wrappers;
* partner protocol vault or LP positions.

## Capital efficiency

The Credit Layer can create higher capital-efficiency opportunities when productive collateral, borrow liquidity, incentives, and compounding all align. These returns are not created from nothing. They may come from a combination of:

* base yield of the collateral;
* LP fees;
* borrowed liquidity redeployed into another productive route;
* reward emissions from external protocols;
* arbitrage or rebalance value;
* lending incentives;
* fee rebates or reimbursements;
* recursive exposure within approved LTV limits.

Borrowing against productive collateral can magnify losses. Credit-market risks are maintained in [Risks](/reference/risks.md).

## cyUSD support system

cyUSD is the CurveYield USD system. Its role in the Credit Layer is to provide or coordinate stable liquidity for approved borrowing markets and earn interest from those markets when risk parameters allow.

The cyUSD system may include:

* collateralized borrowing;
* peg support infrastructure;
* Curve-style or LlamaLend-style market designs where appropriate;
* peg keepers and liquidity support;
* liquidation protection or soft-liquidation-inspired protections where possible;
* vault and staking integrations;
* treasury-managed liquidity deployment.

cyUSD borrowing, peg keepers, liquidation protection, and cyUSD lending markets are released market by market and should be checked against the public product-status and contract-reference pages before use.

## Market transparency

Public credit markets should be described with:

| Field               | Description                                                                         |
| ------------------- | ----------------------------------------------------------------------------------- |
| Status              | Live, Built / Testing, Designed / Pending, Research, or Suspended                   |
| Collateral asset    | Chain, yield source, underlying asset, and address when public                      |
| Borrow asset        | Source of liquidity and interest-rate model                                         |
| Oracle route        | PPS source, rate provider, primary/fallback oracle, and stale-rate handling         |
| LTV and liquidation | Maximum LTV, liquidation threshold, liquidation model, and caps                     |
| Strategy use        | Manual borrowing, vault-managed borrowing, or both                                  |
| Risk reference      | Link to the relevant product page and the central [Risks](/reference/risks.md) page |


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