Interest
Scales with pool utilization.
Every borrower pays an interest rate that rises as more of the pool is lent out.
Lenders are paid first and hit last.
Borrowers pay interest and a WARHORSE premium on every trade, and liquidations pay a fee on remaining margin. Lattica takes no cut. All of it flows to the LP pool.
- Vault fees
- None
- Deposit asset
- USDC
No management, no performance fee
On Polygon / HyperEVM
How LPs earn.
Three income streams, all paid to the pool. Lattica takes no cut of any of them.
WARHORSE premium
Sized to each position’s risk.
Charged up front. Premiums structurally serve as insurance; we expect a surplus, and that surplus is paid to LPs as yield.
Liquidation fee
Charged on remaining margin.
If a position is liquidated, a liquidation fee on its remaining margin is paid to the pool.
19.2%Organic APY target at ~80% utilization
5–10 ptsIncentives
24.2–29.2%Total target APY
Pool terms.
Incentives accrue pro rata to time in the pool. LPs keep everything accrued up to withdrawal, and accrual stops when they leave.
- Deposit asset
- USDC
- Networks
- Polygon / HyperEVM
- Withdrawals
- First in, first out
- Vault fees
- No management, no performance
While withdrawals are pending, returning capital is prioritized for those withdrawals over new lending.
Forecast APY by utilization.
Organic yield only, excluding incentives. The dashed line marks the 80% utilization target.2
| Utilization | Forecast APY |
|---|---|
| 10% | 4.28% |
| 20% | 7.85% |
| 30% | 11.42% |
| 40% | 13.54% |
| 50% | 16.21% |
| 60% | 17.16% |
| 70% | 18.12% |
| 80% | 19.20% |
| 90% | 20.08% |
| 100% | 20.81% |
How losses are absorbed.
Every loan pays interest and a premium when it opens, so lenders earn in every state. When a position fails, the loss is absorbed in order, and lender principal is last in line.
- 01
Trader margin / borrower collateral
Liquidation proceeds from borrower collateral and available trader margin are applied first to reduce the outstanding debt.
- 02
Hot path pool buffer
The buffer advances cash to the lender pool at liquidation, up to its available balance. This smooths day-to-day variation in pool liquidity as liquidations settle.
Seeded at launch, then replenished by unearned premiums not consumed at step 03.
- 03
WARHORSE premium and interest
The loan’s unearned premium and interest cover any gap left in the pool. Income not needed for that gap replenishes the buffer. The LP share accrues to the pool as yield over the loan’s term; only the remaining unearned portion is used in this step.
- 04
Protocol reserve
Funded by protocol revenue, this separate reserve is intended to cover remaining losses before LP yields and principal, up to its available balance.
- 05
LP principal
Only losses left uncovered by the layers above reach LP principal.
- 06
Treasury
Lattica may cover shortfalls at its discretion. LPs should not rely on this.
Collateral, margin, income and reserves absorb losses, in this order, before any remaining shortfall reaches LP principal. Read the protocol paper
Exposure caps.
A concentrated book carries the risk of a correlated drawdown across positions that were each individually well underwritten. Lattica caps exposure at three levels.
By market
No single market can take more than its share of the pool.
By correlated market cluster
Markets that tend to move together are capped as a group.
Across the pool
Total exposure is capped across the whole book.
Notes and method
- Target APY of 24.2–29.2% is an organic APY target of 19.2% at approximately 80% pool utilization, plus targeted incentives, which add 5–10 percentage points. ↩
- The forecast comes from Lattica’s lending pool model: simulated leveraged position openings and originations, generated using a combination of out-of-sample markets and hand-sampled, cleaned beta-test positions. The forecast APY by utilization excludes incentives. Figures reflect upgrades made to the production model since the white papers were published. Simulated performance is not indicative of live results. ↩
Lend to the pool.
Questions about the pool, terms or allocation? We’d like to hear from you.