The lending market provides the USDC liquidity Nami Credit uses to fund credit lines.

Users deposit USDC into the lending market and receive ncUSDC, an ERC-4626 share representing their portion of the vault.

The vault holds USDC available for new credit lines and receivables representing USDC already lent to active credit lines. These receivables remain accounted for as vault assets until they are repaid.

The value of ncUSDC reflects the lender's proportional share of the vault, including yield accrued over time.

Lenders do not earn interest paid by borrowers because Nami Credit does not charge borrowers interest.

Yield comes from a share of the voting rewards generated by the positions used as collateral for credit lines and allocated to the lending market each epoch.

These rewards accrue linearly throughout the epoch and are progressively recognized as vault assets, increasing the value of ncUSDC over time.

No claim is required.

Yield is incorporated directly into the value of ncUSDC and is realized upon withdrawal.

This gradual accrual prevents deposits made shortly before rewards are added from immediately capturing their full value.

Yield is variable and not guaranteed. It depends on the voting rewards generated by collateral positions, credit line activity, and the total capital deposited in the lending market.

Lender yield depends on the value of the voting rewards allocated to the lending market, the amount of capital deposited, and vault utilization. It is expressed as APY and remains variable.

To adjust lender yield to liquidity demand, the protocol applies a target APY based on average vault utilization, which represents the share of deposited liquidity used to fund credit lines.

Low average utilization corresponds to a lower target APY.

A standard target applies within the normal utilization range, while above 80%, the target progressively increases to provide higher returns to lenders and to attract new deposits.

At the end of each epoch, the time-weighted average utilization over the completed epoch determines the target APY applicable to the following week.

The lender premium represents the share of voting rewards generated by the collateral that is allocated to the lending market. The required percentage is determined based on the applicable target APY, deposited capital, vault utilization, and the total value of voting rewards generated.

It can range from 5% to 40%.

Users can deposit from any supported chain using USDC or another supported token available through Nami's routing infrastructure.

The routing system handles the required swaps and cross-chain operations before depositing the resulting USDC into the lending market.

Once the deposit is completed, the user receives ncUSDC representing their share of the vault.

The entire process is handled through a single flow, regardless of the starting asset or chain.

ncUSDC can be redeemed in full or in part.

Withdrawals depend on the liquidity available in the vault, which is the portion of deposits not currently used to fund credit lines.

Available liquidity is replenished through repayments returned to the vault during each epoch's and can also increase through new deposits.

The redeemed value can be received in USDC, USDT, or any other supported asset.

Market utilization represents the share of deposited liquidity currently used to fund credit lines. The remainder stays available in the lending market.

The maxUtilizationRate defines the maximum share of deposits that can be lent. Once this limit is reached, new borrowing is disabled, preserving a liquidity buffer for withdrawals.

Utilization decreases as repayments return liquidity to the vault or new deposits enter the market, allowing additional borrowing.

The maximum utilization rate is also considered when determining the amount a credit line can currently borrow.

If a decline in collateral-generated voting rewards keeps utilization persistently near its limit, the market can enter Recovery Mode.

Debt Health estimates how many weeks would be required to repay total outstanding debt based on the current rate of rewards directed toward debt repayment.

It is calculated after the lender premium and protocol allocation are applied and updated each epoch for individual credit lines and for Nami Credit as a whole.

Debt Health is used during the weekly review of protocol parameters and changes as rewards, debt, and market activity change.

Recovery Mode is activated when predefined conditions are met, such as vault utilization remaining at its maximum for multiple consecutive epochs alongside a persistent decline in collateral-generated voting rewards. Activation takes effect immediately.

While Recovery Mode is active, the lender premium and protocol allocation are set to 0%, and 100% of serviced voting rewards is directed toward reducing outstanding debt.

New borrowing and new deposits into the lending market are suspended.

Withdrawals remain enabled and are processed proportionally based on each lender's share of the vault as liquidity returns through repayments. This prevents a first-come, first-served withdrawal race.

Recovery Mode remains active until market conditions and available borrowing capacity have returned to a healthy level.

Deposited capital is exposed to protocol and smart contract risk. Lender yield is variable and not guaranteed.

Lender yield depends on credit line activity and the voting rewards generated by collateral. A sustained decline in these rewards can reduce lender yield and slow the return of liquidity to the vault.

Nami Credit does not use price-based liquidations. Credit lines are sized according to the estimated reward-generating capacity of the collateral and are repaid over time through voting rewards.

Credit sizing, utilization and deposit limits, the dynamic lender premium, Debt Health, and Recovery Mode are designed to manage market liquidity and reduce the impact of a prolonged decline in collateral-generated rewards.