New ARM Markets Now Live on Morpho

Origin's Automated Redemption Manager (ARM) now has two Morpho markets live, giving depositors the ability to borrow against their ARM positions and leverage loop their yield.

What the ARM Does

The ARM is a vault that generates ETH-denominated yield by arbitraging the spread between LST market prices and their underlying collateral value.

When stETH or eETH trades at a discount on AMMs relative to redemption value, the ARM captures that spread through integrations with DEX aggregators. For example, the stETH ARM may submit a bid to fill swaps at 0.9993 ETH per 1.000 stETH through CoWSwap, and when the swap is filled, the stETH ARM redeems the stETH for 1.000 ETH through Lido’s withdrawal queue to profit from the spread.

Volatility creates more of these opportunities, which is why ARM yields tend to strengthen during periods of market stress. During peak volatility, both the stETH ARM and eETH ARM have achieved daily APYs over 30% – which can now be amplified through looping on Morpho.

New Morpho Markets

Two markets are now live and onboarded in the ETH Yield vault curated by kpk:

The ARM-WETH-stETH market allows stETH ARM depositors to borrow WETH against their position. The market carries a 91.5% LTV with a current borrow rate of 2.9%, and the stETH ARM has yielded an average 4.5% APY over the trailing 30 days. Depositors can borrow WETH, redeploy it into the ARM, and loop their exposure for leveraged yields.

The ARM-WETH-eETH market follows the same structure for eETH ARM depositors. The market carries an 88% LTV with a current borrow rate of 2.3%, and the eETH ARM has yielded 4.4% APY over the trailing 30 days.

Both markets are available on Morpho now.

How Leverage Looping Works

Depositing into an ARM Vault and borrowing WETH against that position allows you to redeposit and compound exposure to ARM yields. The spread between the ARM APY and the borrow rate determines the net benefit of each loop. At current rates, the stETH ARM yields an average 4.5% APY against a 2.9% borrow rate; the eETH ARM yields 4.4% APY against a slightly lower 2.3% borrow rate.

The LTV determines how aggressively a position can be looped. The stETH market's 91.5% LTV allows for tighter loops than the eETH market's 88% LTV. As with any leveraged position, borrowers should account for borrow rate variability and liquidation risk when sizing exposure.

Get Started

Deposit into the stETH or eETH ARM and access the Morpho markets to begin looping your yield.

Origin Dapp: app.originprotocol.com stETH ARM Morpho market: here eETH ARM Morpho market: here