Market Structure

246 Market : [Re-Lending Asset] Delegation Asset

In 246 Club, each market follows the format [Re-Lending Asset] Delegation Asset.

If you need a refresher on Re-Lending or Credit Delegation, check out the Re-Lending section first.

Re-Lending Asset: An aToken from Aave (e.g., aUSDC) that represents a lending position in Aave. Suppliers (re-lenders) deposit this asset into a market.

Delegation Asset: The token Re-Lending Asset is delegating the borrowing power for borrowers to bo (e.g., USDC).

Market Configuration

Re-Lending <> Delegation asset

• A market usually pairs an aToken (Re-Lending Asset) with its underlying token as the Delegation Asset(e.g., [aUSDC]USDC) or with a highly correlated token (e.g., [aUSDC]GHO).

Only one Delegation Asset per market, can have multiple Re-Lending assets per market

• A single Delegation Asset can pair with multiple Re-Lending Assets in one market.

  • For example, a market could be [aUSDC, aUSDT]GHO market, letting re-lenders deposit aUSDC and aUSDT and delegate GHO borrowing power.

• However, you can’t have a market with multiple Delegation Assets.

  • For instance, [aUSDC]GHO,USDC isn’t allowed.

Collateral listings

• Each market can have multiple approved collaterals. This approach reduces fragmented liquidity: a single market supports various collateral types.

• Collateral eligibility is market-specific. Just because an asset is listed as collateral in one market doesn’t guarantee it’s listed in another.

• Early on, we focus on collaterals closely correlated to the Delegation Asset. Later, we’ll expand to more varied pairs (e.g., using ETH vault positions as collateral to borrow stablecoins).

  • Example :

  • A Morpho USDC Vault position appear as collateral in [aUSDC]GHO market.

  • A Morpho wETH Vault position appear as collateral in [aWETH]WETH market.

Pair based layout within our UI can be contrasting to the explantion above, but the above is how our markets are structured, it is just breaken down into pairs for straightforward comparison of different conditions and parameters of pairs due to our pair specific interest rate model and risk management.

Utilization

The utilization ratio in a re-lending market tells us how much of the delegated borrowing power is being used. It’s calculated as:

Utilization Ratio = Borrowing Power Used / Total Delegated Borrowing Power

Let’s take the [aUSDC]USDC market as an example. Suppose a re-lender deposits 100 USDC on Aave, which becomes 100 aUSDC (Aave’s token for deposited USDC). From this, they delegate borrowing power worth 80 USDC to borrowers. If borrowers use 72 USDC of that borrowing power, the utilization ratio is:

72 USDC (borrowed) / 80 USDC (delegated borrowing power) = 90%

This 90% utilization ratio means that 90% of the available borrowing power in the [aUSDC]USDC market is in use. The remaining 10% is what we call the underutilized portion, which plays a key role in managing liquidity and withdrawals.

Risk Management

We strive for efficient capital usage via a semi-unified pool structure. However, each market and pair also enforces its own risk controls:

Interest Rate Model

• Within a given market, all delegated borrowing power and collaterals share a global utilization.

• The base interest rate hinges on that utilization, then adjusts for pair-specific factors.

• See our detailed Interest Rates doc for more on how each market’s rate curve is set.

Risk Parameters

• Loan-to-Value (LTV) ratios, Liquidation Thresholds, and other parameters can vary by combination of a pair.

• The same collateral may have a different LTV in different markets, depending on the Delegation Asset.

• Read more about these Risk Parameters to understand how they affect each pair.