Introducing DELV Fixed Borrow: Taking the Chaos Out of DeFi Borrowing
We're excited to unveil DELV Fixed Borrow—a new product from the builders at DELV and created in collaboration with Morpho—that will play a game-changing role in the DeFi lending landscape.
Borrow Better, Borrow Fixed.
Meet DELV Fixed Borrow a new product from the builders at DELV (created in collaboration with Morpho) that will play a game-changing role in the DeFi lending landscape.
Today, the DeFi borrowing environment is plagued by unpredictable costs and volatile markets. In this uncertain space, how can borrowers expect to plan for the future, make long-term investment decisions, or grow their crypto assets with confidence?
Navigating these waters can seem impossible at times. DELV Fixed Borrow aims to solve that.
Our novel solution lets DeFi borrowers lock in a fixed rate for their existing loans, giving them a transparent, reliable, and predictable way to offset their risk against variable rate volatility.
Why We Care About Borrow Rate Volatility (and You Should Too)
More than 86% of DeFi loans in the most active/liquid markets on Morpho, Spark, and Aave are valued at $1 million or more.* Those borrowers face exposure to sudden swings in variable rates, and in the past several months, borrowers have faced a lot of interest rate volatility. Even relatively stable yield sources like the DAI Savings Rate (DSR) have been relatively unpredictable. That’s why fixed rates can be crucial for mitigating risk.
*Dune Analytics, Sept. 4, 2024
DSR APY VS. TVL
Source: DeFi Llama, Oct. 16, 2024
By using DELV Fixed Borrow, you can:
- Protect Against Rising Rates: Set a ceiling on your interest costs to keep your borrow costs lower when variable rates rise.
- Gain Predictability: Enjoy peace of mind from knowing that your borrow costs won't unexpectedly increase.
- Retain Flexibility: Switch back to a variable rate by closing the fixed rate protection at any time.
With fixed rate borrowing, users can confidently pursue longer-term strategies without worrying about rising interest costs. Locking in fixed rates can also be a strategic way to offset sudden market shifts, helping reduce risk.
How Exactly Do We “Fix” Borrowing?
DELV Fixed Borrow lets borrowers obtain fixed rates by opening a corresponding Short position on the Hyperdrive Protocol up to the same size as their borrow position. By opening a short on Hyperdrive, users pay a one-time cost to gain multiplied exposure to the variable supply rate in the corresponding Morpho lending market that has been integrated into Hyperdrive as a yield source.
DELV Fixed Borrow uses Hyperdrive to offset the cost of borrowing with profits from lending, letting users earn from a lending position as large as their existing loan by paying only a fraction of the capital upfront.
In other words, a user’s earnings from Hyperdrive can help to offset their borrow costs, ultimately resulting in a “fixed” borrowing rate.
When we say “fixed rate,” “cap,” “ceiling,” or similar term, we’re referring to an upper bound on the effective fixed rate. The net interest paid on your borrow position may be less than the displayed fixed rate and, in some rare circumstances, it may be more. See the DELV Fixed Borrow Docs for more information about corresponding risks.
5 Steps to Gain Stability
DELV Fixed Borrow is not a lending market—it’s a platform that lets you set a fixed rate for what you’ve already borrowed. At launch, that means users can take out loans through select Morpho markets (sUSDe/DAI and USDe/DAI) on Ethereum mainnet and then fix their rate on the DELV Fixed Borrow app. And don’t worry, we expect to add more markets and chains soon!
The process is simple, and we’ve designed it to be as seamless as possible.
Here’s how to get started:
Step 1: Connect your wallet on the DELV Fixed Borrow app and add fixed rate protection to one of your existing Morpho borrow positions. 👇
If you don’t already have a Morpho borrow position, you can go to the Morpho App to borrow directly with them. You can see compatible markets under the Start with a Morpho Position section.
Step 2: Input the amount of debt you’d like to “fix” and click on “Lock in your rate.” 👇
Step 3: Wait while your transaction is executed on the blockchain. 👇
Step 4: Once the transaction goes through, you’ve locked in your fixed rate. Congratulations!👇
After you’ve fixed your rate, you can easily monitor your positions by clicking on the “My Active Borrows” tab. If you need to adjust your position(s), just select the “Convert More Debt,” “Revert to Variable,” or “Close Position” options. 👇
Remember, you can close your DELV Fixed Borrow position to revert your Morpho loan back to a variable rate, and you may get back a portion of your opening costs (depending on then-current market conditions).
Step 5: After you close your fixed borrow position, you’ll need to claim any accrued earnings and use them to separately offset the interest payable on your corresponding Morpho loan.
How Long Does Your Fixed Rate Last?
The fixed rate’s duration is tied to the underlying Hyperdrive market. You can choose from the available durations as part of the Fixed Borrow conversion process. Your rate protection will stop once your position expires, at which point you can open a new Fixed Borrow position under the new market conditions to continue protecting your borrow rate.
Does Your Fixed Borrow Position Protect You From Getting Liquidated?
No. The DELV Fixed Borrow product only protects you from rate volatility and ensures that your borrowing costs remain under the specified threshold. DELV Fixed Borrow does not protect you from liquidations of your collateral on Morpho triggered by collateral or loan asset price fluctuations. You should monitor your loan’s health at all times.
Borrow Better. Borrow Fixed.
DeFi borrowers don’t have to settle for instability. With DELV Fixed Borrow, they can experience more control, predictability, and peace of mind with fixed rates.
Ready to join the next era of borrowing? Get started here: https://fixed-borrow.hyperdrive.box/.
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Note: This blog post is general in nature and for informational purposes only. It is not legal, tax, investment, financial or other advice, nor is it a comprehensive or complete statement of the matters discussed. It is not a recommendation of an investment strategy and should not be used as the basis of any investment decision.
All transactions and investments involve risk, and past performance does not guarantee future results. Certain complex strategies carry additional risk and are not appropriate for all users. As with any DeFi or crypto position, you may incur losses. You alone are responsible for evaluating the benefits and risks associated with any decision to use Hyperdrive or DELV Fixed Borrow and the risks or concerns with any underlying yield source.
DELV Hyperdrive products, like DELV Fixed Borrow, are not currently available in certain jurisdictions, such as the USA and the UK. If you are a US or UK citizen/LPR or currently located there, you may access a read-only version (if available) of DELV Fixed Borrow solely to see an example frontend built on top of the Hyperdrive protocol. DELV does not promote or advertise use of DELV Hyperdrive products in the USA or the UK.