The elasticity gap
The elasticity gap
Borrowed Elasticity
Borrowed Elasticity
Borrowed Elasticity
How onchain credit earns a yield it cannot create, where the leverage went instead, and what it takes to build funding that stays.
How onchain credit earns a yield it cannot create, where the leverage went instead, and what it takes to build funding that stays.
Inside This Report
Inside This Report
What a Vault Cannot Do
What a Vault Cannot Do
A bank creates the deposit in the act of lending, which is why its balance sheet can expand to meet demand. A vault holds what savers have delivered, allocates it under a mandate, and returns it. Every dollar it lends was saved into it first. The Chicago Plan of 1933 proposed that design as a reform of banking, and the onchain dollar system is the first to run it at scale.
A bank creates the deposit in the act of lending, which is why its balance sheet can expand to meet demand. A vault holds what savers have delivered, allocates it under a mandate, and returns it. Every dollar it lends was saved into it first. The Chicago Plan of 1933 proposed that design as a reform of banking, and the onchain dollar system is the first to run it at scale.
The Multiplier Moved to the Collateral Side
The Multiplier Moved to the Collateral Side
Leverage survived the loss of credit creation by changing location. Loopers borrow against collateral, buy more and deposit again, vault shares are pledged in other markets, and yield tokens are wrapped and re-lent. One market Sentora curates carries $144.9 million of debt against $50.6 million of looper equity, and every vault inside it is individually fully funded. The eurodollar market argued the same point for sixty years without ever measuring it.
Leverage survived the loss of credit creation by changing location. Loopers borrow against collateral, buy more and deposit again, vault shares are pledged in other markets, and yield tokens are wrapped and re-lent. One market Sentora curates carries $144.9 million of debt against $50.6 million of looper equity, and every vault inside it is individually fully funded. The eurodollar market argued the same point for sixty years without ever measuring it.
The Premium That Funded the Tourist Era Is Gone
The Premium That Funded the Tourist Era Is Gone
In early January 2025 the onchain secured rate sat roughly 800 basis points above SOFR. On the August 2026 fixing it clears about 70 basis points over, with the USDT leg printing below it. Yield now comes from three identifiable places: leverage demand inside the system, cashflows imported from traditional markets, and incentive spend shaped to resemble interest. A headline number that cannot be split across those three is marketing.
In early January 2025 the onchain secured rate sat roughly 800 basis points above SOFR. On the August 2026 fixing it clears about 70 basis points over, with the USDT leg printing below it. Yield now comes from three identifiable places: leverage demand inside the system, cashflows imported from traditional markets, and incentive spend shaped to resemble interest. A headline number that cannot be split across those three is marketing.
Funding Has to Be Constructed
Funding Has to Be Constructed
Money market funds are fully pre-funded and unlevered, and investors still pulled around $300 billion from prime funds in one week of 2008 and roughly $200 billion in March 2020. Onchain float behaves the same way, without the capital gate that eventually governed brokered deposits. The report sets out term share classes, funding-concentration disclosure, insurance attachment, and one published ratio that turns sustainable yield into a test.
Money market funds are fully pre-funded and unlevered, and investors still pulled around $300 billion from prime funds in one week of 2008 and roughly $200 billion in March 2020. Onchain float behaves the same way, without the capital gate that eventually governed brokered deposits. The report sets out term share classes, funding-concentration disclosure, insurance attachment, and one published ratio that turns sustainable yield into a test.
Why DeFi and Institutional Readers Need This Report
Decompose the yield you are quoted
Every posted APY splits into organic yield, incentive uplift, strategy premium, and the liquidity and exit discount. The report shows how to run that split, and what a full parse of stablecoin pools above $100 million says about which of them would still pay anything once rewards stop.
See the leverage a fully funded system still carries
Pre-funding is a property of a single balance sheet, and it does not compose. The report traces how re-collateralization rebuilds a multiplier on fully funded rails, why the eurodollar record suggests it stays bounded, and where the measurable part of the system ends.
Price the stickiness of your funding
Mercenary capital, treasury mandates, platform float and term-locked shares behave differently under stress. The report ranks the four layers with evidence in both directions, including a chain whose TVL fell 98.7% once its points era ended, and an embedded product that gathered $611 million from more than 80,000 depositors in under six months.
Understand where the yield really comes from
A data-driven look at onchain credit, leverage, and what it takes to build funding that stays. Get the full report.
Why DeFi and Institutional Readers Need This Report
Decompose the yield you are quoted
Every posted APY splits into organic yield, incentive uplift, strategy premium, and the liquidity and exit discount. The report shows how to run that split, and what a full parse of stablecoin pools above $100 million says about which of them would still pay anything once rewards stop.
See the leverage a fully funded system still carries
Pre-funding is a property of a single balance sheet, and it does not compose. The report traces how re-collateralization rebuilds a multiplier on fully funded rails, why the eurodollar record suggests it stays bounded, and where the measurable part of the system ends.
Price the stickiness of your funding
Mercenary capital, treasury mandates, platform float and term-locked shares behave differently under stress. The report ranks the four layers with evidence in both directions, including a chain whose TVL fell 98.7% once its points era ended, and an embedded product that gathered $611 million from more than 80,000 depositors in under six months.