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Stormbit

How It Works

Every loan on Stormbit is collared at origination: a put under the collateral, a short call above it, written on Deribit before any USDC moves. No loan exists without its hedge.

1. Lender deposits USDC

Lenders deposit USDC and receive soUSD. Deposits fund loans for the chosen tenor; yield accrues from the option premium each funded loan generates. See Earn.

2. Borrower posts collateral and takes a loan

Borrower posts BTC or ETH and selects a settlement expiry, loans follow listed option expiries, granular from days to months out. The protocol quotes the loan amount and the cap level, the call strike above which upside belongs to the desk until settlement. APR is 0%; the cap is the price of the loan.

3. The collar is written at origination

Before USDC is released, the desk executes the collar on the borrower’s collateral on Deribit: a put struck at or above the loan value (the floor), and a short call (the cap). The net premium funds the loan economics, the borrower’s protection and the lender’s yield are paid for at trade entry, not promised from future revenue.

4. Loan is active, no liquidation

The borrower holds their USDC. Collateral is locked. No matter what happens to the collateral price during the term, the position cannot be liquidated. There is nothing to monitor, the floor is already bought.

5a. Borrower repays

Borrower repays the principal by maturity and gets the collateral back. If spot finished above the call strike, the upside above the strike settles to the desk, that is the cap doing what it was priced to do.

5b. Borrower defaults

If the borrower doesn’t repay by maturity:

  • The put settles or is exercised, covering the loan value down to the floor
  • Collateral enters a Dutch auction in Deals, price drops over time until a buyer steps in
  • The lender’s principal is covered by collateral plus the put payoff

The floor, The put strike, set at or above Loan Amount / Collateral Units at origination. Above the floor, collateral alone covers the loan. Below it, the put pays the difference.

Pricing, The collar is priced from a 2D vol skew surface calibrated weekly against live OTC quotes, with adaptive strike selection. Three inputs drive the structure: LTV, term, and implied volatility. The protocol pauses new originations in extreme volatility regimes rather than writing mispriced collars.

Settlement, Lazy. Yield is recorded at loan settlement and distributed when lenders interact with the protocol (deposit, withdraw, or settle). Gas-efficient at scale.