Vanilla Markets

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Overview

Vanilla Markets sit alongside the feUSD CDP market as another lending option. It is built on Morpho’s lending stack and pair borrows and lenders.

Side	Role	What they supply	What they earn / pay
Borrowers	Deposit collateral to borrow an asset (e.g., HUSD, HYPE, USDC). Debt accrues at a dynamic variable rate.	Collateral (HYPE, UBTC, ETH …)	Pay a floating borrow APY determined by utilisation.
Lenders	Supply idle assets (HYPE, USDC,‑etc.) to earn yield. Funds are matched P2P first; excess sits in the underlying pool.	Assets they wish to earn on	Earn the borrow APY minus a small protocol spread.

Unlike the CDP, there are no redemptions or borrower‑set fixed rates—all pricing follows a utilisation curve.

Why Use Vanilla Markets?

1. Asset‑native borrowing — obtain HYPE, USDC, or other supported tokens directly, avoiding the need to mint feUSD and swap.

2. No redemption risk — positions are immune to the feUSD peg mechanics.

Trade‑offs vs. the feUSD CDP

• Higher effective borrow cost on average (floating APR vs. self‑selected fixed rate).

• Lower LTV (75–80 % typical) because the Stability Pool backstop is absent.

• Interest‑rate volatility — costs can spike in a liquidity crunch.