Welcome to another DeFi Markets Update—your no-nonsense briefing on the cryptobanking plumbing and market pulse.
Prime USDC Rates on Base & Ethereum have started to Converge
Throughout this year, Base has had a consistent organic premium over Ethereum mainnet of around 50–100 bps.
However, the spread between the Steakhouse Prime USDC vaults on Base and Ethereum has been slowly but surely flattening, as the two rates have started converging over the past few weeks.
These rates are closely connected to their underlying markets, which, in the case of the Prime vaults, are primarily the cbBTC/USDC markets on Base and Ethereum. Over the year, Base has consistently yielded more due to strong Coinbase app borrowing demand, but recently more supply has been coming in. Since mid-August, Spark has been adding liquidity through its Liquidity Layer, which allocates capital toward attractive yields. That extra supply has kept up with growing borrowing demand and slightly pushed lender yields down.
On the other hand, Ethereum saw the opposite dynamic. From August through September, around $75-80m of liquidity was withdrawn from the underlying market by several large lenders, while borrowing still continued to grow by $30-40m. Less supply combined with stable borrowing pushed utilisation above the market’s target and increased the reward for lending.
It is important to note that the Base cbBTC market is 12.5x larger than the Ethereum one, and therefore is more stable against individual supply and borrowing flows.
Ethena Rolls Out New Collateral Rewards on Morpho Markets
Ethena has now launched a 5% collateral reward on Morpho for USDe collateral, including the USDe/USDC market on Base and USDe/USDG market on Robinhood Chain.
Both markets are already among the largest markets on Morpho, currently with over $390m TVL on Base and $342m on Robinhood Chain, with substantial and steadily growing liquidity, supported by strong borrow demand.
These incentives make looping USDe more attractive, since the 5% collateral reward helps cover the cost of borrowing. Borrow rates have consistently stayed at 4%, so loopers are currently left with a positive spread between what the collateral earns and what they pay to borrow.
Notably, Maple also provides collateral rewards across several syrupUSD markets, helping create attractive looping spreads. For example, syrupUSDC currently earns around 5%, while the borrow rate is only at 0.4% in the syrupUSDC/AUSD market and 4.8% in the syrupUSDC/USDC market on Mainnet.
Zama Incentives Push Prime USDT Above 8% APY
Zama has rolled out new incentives on their UI for the new confidential vaults, as previously mentioned in one of our DeFi Markets Update.
The incentives are distributed among three Steakhouse vaults: Confidential Prime USDC, Prime USDT and tGBP.
Currently, the Steakhouse Prime USDT rate is around 3% on Morpho, however through the Zama Earn page there is an incentive boost that pushes the yield above 8% for the exact same strategy, just lending through a different platform.
The Prime USDT vault has exposure mainly to wstETH, WBTC and cbBTC, making it a blue chip vault and it has been earning around 6-8% incentivised APY consistently for the past three weeks.
