[ECSV-02] Competitive Rate Posture for Monad Markets
Emergency Community Signal Vote: Conducted outside the standard framework. The team commits to executing the winning option.
In short
This is a plan to grow Neverland’s markets. Borrowing gets cheaper and the protocol keeps a smaller share of the interest, so revenue falls in the short term. The bet is scale: past the break-even point below, cheaper borrowing across larger markets earns Neverland more than it earns today.
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Borrowers: rates fall by 3.2 to 4.2 percentage points at today’s utilization.
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Short-term cost: stablecoin revenue falls from $84,863 to $34,517 a year (-59%), a reduction equal to 25% of Neverland’s total lending revenue.
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Break-even: $6.6M of stablecoin supply at 80% utilization. Today the markets hold $4.6M at 59%.
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Beyond break-even: at $9.2M and 80% utilization, the same markets earn $118,293 a year (39% more than today) while borrowers pay 5.33%.
Why this vote is happening now
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Monad market TVL and utilization have been declining.
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Stablecoin borrow rates on Neverland are well above what comparable lending markets on Monad charge.
- Snapshot of 30 September 2026: Neverland charges 7.82% on USDC, 6.68% on USDT0 and 8.63% on AUSD. The largest stablecoin lending market on Monad charges 4.99% on USDC and USDT0 and 4.88% on AUSD.
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The current model relies on DUST rewards to offset borrowing costs. Since the change to how DUST is claimed, borrowers can no longer sell rewards immediately without a 50% penalty, so many move to cheaper venues.
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Competitors on Monad have astronomically larger MON incentive budgets. Matching them on incentives alone is not realistic.
What you are voting on
Whether Neverland lowers its stablecoin borrow rates and its protocol margin (reserve factor), and moves all stablecoin DUST emissions from borrowers to suppliers, so that borrowing is competitive on the base rate alone. The protocol accepts lower revenue in the short term to grow its stablecoin markets.
Facts to understand before voting. Read this section.
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Borrowers pay much less. At current utilization, borrow rates fall by 3.2 to 4.2 percentage points on every stablecoin market. At today’s balances borrowers save about $97,100 a year.
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The protocol pays for it. Protocol revenue falls for two separate reasons:
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Lower borrow rates. The protocol takes a share of a smaller interest bill. This is the larger part of the cut, 77% of it.
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A lower reserve factor, 40% to 30%. This hands part of the protocol’s share to suppliers, softening the drop in supply rates that lower borrow rates would otherwise cause. This is 23% of the cut.
Together, protocol revenue per dollar borrowed falls by 59%: 53% on AUSD, 59% on USDC and 72% on USDT0.
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Suppliers still see a lower base rate. The reserve factor cut recovers part of it, not all. The remainder is made up by moving all stablecoin DUST emissions to the supply side. At the current DUST price, the DUST moving to suppliers is worth more than the base interest they give up in each market.
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This is a bet on scale. At today’s balances, stablecoin revenue falls by $50,346 a year (59%). Across all Neverland pools, lending revenue falls by 25%, from $203,498 to $153,152 a year. Revenue returns to today’s level once stablecoin supply and utilization reach the break-even line in the table below. If they do not, revenue is simply lower. Lower revenue means less for veDUST lockers and fewer LP rewards, at least in the short term.
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Lower rates do not guarantee more borrowing. Part of the decline may come from slower user growth across Monad as a whole, which no rate change can fix.
Options
Option 1: Stablecoin markets only (USDC, USDT0, AUSD)
One new interest rate strategy, shared by all three markets:
| Parameter | Current | Proposed |
|---|---|---|
| Optimal utilization | 90% | 90% |
| Base borrow rate | 5% | 0% |
| Slope 1 | 4% | 6% |
| Slope 2 | 50% | 40% |
| Reserve factor | 40% | 30% |
Borrow rate by utilization:
| Utilization | Current (APR) | Proposed (APR) | Proposed (APY) |
|---|---|---|---|
| 0% | 5.00% | 0.00% | 0.00% |
| 20% | 5.89% | 1.33% | 1.34% |
| 40% | 6.78% | 2.67% | 2.70% |
| 60% | 7.67% | 4.00% | 4.08% |
| 80% | 8.56% | 5.33% | 5.48% |
| 85% | 8.78% | 5.67% | 5.83% |
| 90% (optimal) | 9.00% | 6.00% | 6.18% |
| 92% | 19.00% | 14.00% | 15.03% |
| 95% | 34.00% | 26.00% | 29.69% |
| 100% | 59.00% | 46.00% | 58.41% |
Below 90% utilization the rate rises gradually with demand. Above 90% it rises by 4 percentage points for every point of utilization, which is designed to pull utilization back below 90% quickly and keep liquidity available for withdrawals.
Effect at current utilization:
| Market | Utilization | Borrow today | Borrow new | Supply today | Supply new |
|---|---|---|---|---|---|
| USDC | 63.4% | 7.82% | 4.23% | 2.97% | 1.87% |
| USDT0 | 37.8% | 6.68% | 2.52% | 1.51% | 0.67% |
| AUSD | 81.7% | 8.63% | 5.45% | 4.23% | 3.12% |
Supply rates are base rates, before DUST. Of the new supply rates, the reserve factor cut contributes +0.27pp on USDC, +0.10pp on USDT0 and +0.45pp on AUSD.
What it costs
Protocol revenue at today’s balances, per year:
| Market | Borrowed | Today (40% RF) | Proposed (30% RF) | Change |
|---|---|---|---|---|
| USDC | $1.15M | $35,930 | $14,567 | -$21,363 (-59%) |
| USDT0 | $0.63M | $16,868 | $4,769 | -$12,099 (-72%) |
| AUSD | $0.93M | $32,065 | $15,182 | -$16,884 (-53%) |
| Stablecoins | $2.71M | $84,863 | $34,517 | -$50,346 (-59%) |
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Stablecoins are 56% of core-pool revenue and 42% of Neverland’s lending revenue across all pools.
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Across all pools, lending revenue falls from $203,498 to $153,152 a year (-25%).
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Per week, stablecoin revenue falls from $1,628 to $662.
If this option wins, the Isolated Pendle AUSD market will also be considered by the team, with a separate strategy that, while being competitive, still makes sense for this unique market.
What it takes to earn it back
All three markets share one curve, so their revenue depends on two numbers: total stablecoin supply (TVL) and utilization. The table shows the TVL at which stablecoin revenue returns to today’s $84,863 a year.
| Utilization | Borrow rate | Stablecoin TVL needed | vs today ($4.62M) | Borrowing needed | vs today ($2.71M) |
|---|---|---|---|---|---|
| 60% | 4.00% | $11.79M | 2.55x | $7.07M | 2.61x |
| 65% | 4.33% | $10.04M | 2.17x | $6.53M | 2.41x |
| 70% | 4.67% | $8.66M | 1.87x | $6.06M | 2.24x |
| 75% | 5.00% | $7.54M | 1.63x | $5.66M | 2.09x |
| 80% | 5.33% | $6.63M | 1.43x | $5.30M | 1.96x |
| 85% | 5.67% | $5.87M | 1.27x | $4.99M | 1.84x |
| 90% | 6.00% | $5.24M | 1.13x | $4.71M | 1.74x |
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At today’s TVL, revenue only returns to today’s level above the 90% optimal point (at 90.2% utilization, where the borrow rate is 6.79%). A healthy break-even needs more supply.
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The table assumes the three markets run at similar utilization. Uneven utilization earns slightly more, so these figures are conservative.
Beyond break-even
Stablecoin revenue as a share of today’s, by TVL and utilization. Anything above 100% is more revenue than today.
| Stablecoin TVL | 60% utilization | 70% utilization | 80% utilization | 90% utilization |
|---|---|---|---|---|
| $4.6M (today) | 39% | 53% | 70% | 88% |
| $5.8M (+25%) | 49% | 67% | 87% | 110% |
| $6.9M (+50%) | 59% | 80% | 105% | 132% |
| $9.2M (2x) | 78% | 107% | 139% | 176% |
| $13.9M (3x) | 118% | 160% | 209% | 265% |
Example: stablecoin TVL doubles to $9.2M and runs at 80% utilization, with $7.39M borrowed. Borrowers pay 5.33% instead of today’s 6.68% to 8.63%, and the same markets earn $118,293 a year, 39% more than today.
Worked example: USDC market, $1.81M supplied, $1.15M borrowed (63.4% utilization), per year
| Today (40% RF) | New rates, 40% RF | New rates, 30% RF (proposed) | |
|---|---|---|---|
| Borrow rate (APR) | 7.82% | 4.23% | 4.23% |
| Interest paid by borrowers | $89,825 | $48,556 | $48,556 |
| Protocol revenue | $35,930 | $19,422 | $14,567 |
| Paid to suppliers | $53,895 | $29,134 | $33,989 |
| Supply rate (base, before DUST) | 2.97% | 1.61% | 1.87% |
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Borrowers save $41,269 a year, 46% less.
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Protocol revenue falls by $21,363, 59% less:
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$16,508 (77% of the cut) from lower borrow rates.
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$4,855 (23% of the cut) from the reserve factor cut, all of it passed to suppliers, lifting their base rate by 0.27pp.
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Suppliers’ base rate falls 1.10pp (2.97% to 1.87%) instead of 1.36pp without the reserve factor cut. DUST moved from borrowers covers the rest.
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USDC revenue returns to today’s $35,930 at $2.8M supplied and 80% utilization, or at $2.2M and 90%.
Consequences: Stablecoin borrowing becomes competitive with the rest of Monad on the base rate alone, particularly for the entry point of most retail users: stablecoins borrowed against BTC, ETH and MON. A clean borrow rate with no reward arithmetic.
Trade-offs: At unchanged balances, stablecoin protocol revenue falls by 59% ($50,346 a year), which is 25% of Neverland’s total lending revenue. veDUST and LP rewards fall accordingly until the stablecoin markets grow past break-even.
Option 2: Stablecoins and Volatiles
Apply all changes under Option 1 to USDC, USDT0 and AUSD, while also moving other major volatile assets toward a more competitive interest-rate configuration.
The volatile markets would retain their existing risk parameters, while their interest-rate strategy would be adjusted to reduce borrowing costs and improve its competitiveness against other Monad lending markets. The exact reserves interest-rate parameters will be determined from market utilization and comparable Monad lending rates at execution, using the same objective of reducing the base borrowing cost without relying on DUST emissions to make the effective rate competitive.
What is at stake: MON is Neverland’s largest revenue market. At the snapshot it earns $64,527 a year (43% of core-pool revenue) at 82.4% utilization, above its 80% optimal point, with a 16.31% borrow rate.
Consequences: A competitive posture across Neverland’s core stablecoin, MON and other reserves borrowing markets.
Trade-offs: Protocol revenue would decline by more than under Option 1 because the lower-margin posture would also extend to MON and other major assets.
Option 3: Make no changes
Parameters stay as they are today; DUST remains the main offset to borrowing costs.
Consequences: No parameter-driven reduction in protocol revenue for veDUST or LPs.
Trade-offs: The current rate gap with competing markets remains, as does the dependence on DUST rewards to offset higher borrowing costs.
How we will know if it is working
The change will be evaluated against the stablecoin market balances and protocol revenue recorded immediately before execution. For reference, at the snapshot the stablecoin markets held $4.62M of supply and $2.71M of borrowing, and earned $1,628 of protocol revenue per week.
Assuming execution on 2 October 2026, checkpoints will be conducted after two weeks on 16 October 2026 and after four weeks on 30 October 2026.
The initial targets are:
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Stablecoin borrowing: increase by at least 25% by 16 October and 50% by 30 October.
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Stablecoin supply: remain at or above 90% of the execution baseline through 30 October.
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Utilization: stablecoin markets should generally operate within a 60-85% utilization range, without sustained movement above the 90% optimal-utilization point.
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Protocol revenue: weekly stablecoin protocol revenue should recover to at least 60% of the pre-change baseline by 30 October.
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Borrow rates: stablecoin borrowing should remain materially below the current 6.7-8.6% range under normal utilization.
What the targets mean for revenue at today’s supply: 25% more borrowing restores about 58% of today’s stablecoin revenue, and 50% more restores about 84%. Reaching 50% more borrowing inside the 60-85% range also requires supply growth, because at today’s supply it would mean 88% average utilization.
These are short-term evaluation targets, not the economic break-even point. Full break-even needs stablecoin TVL of about $6.6M at 80% utilization, $5.9M at 85% or $5.2M at 90%.
Failure to reach full revenue break-even within four weeks will not by itself trigger a reversal. The two-week checkpoint will be used to evaluate the initial direction of borrowing, supply, utilization and revenue. The four-week checkpoint will determine whether the new posture is producing sufficient improvement to continue.
If borrowing does not show meaningful growth, supply materially contracts, utilization becomes unhealthy, or protocol revenue remains below the acceptable range by 30 October 2026, the team will reassess the parameters through the standard governance process.
What this vote does NOT decide
The emissions schedule, DUST claim mechanics, cross-chain deployment, isolated-market parameters and treasury actions are out of scope and will continue to be handled through the standard governance process.
The movement of existing DUST emissions from borrowers to suppliers on the affected stablecoin markets is in scope. The total amount of DUST emitted is not changed by this vote.
After the vote
Voting will remain open for 48 hours, from 1 October 2026 to 3 October 2026 (UTC).
The team will execute the winning option within 12 hours of the vote closing using Neverland’s existing protocol administration and governance execution infrastructure.
As mentioned above, the Isolated Pendle AUSD market and other isolated markets will also be considered by the team, with a separate strategy that, while being competitive, still makes sense for this unique market.
The market state immediately before execution will be recorded as the baseline for the 17 October and 31 October checkpoints.
Data
All figures come from Monad mainnet at block 109,454,014 (30 September 2026, 23:32 UTC) and are annualized at the balances and rates of that block. Rates are APR; the app displays APY, which compounds slightly higher (6.00% APR is 6.18% APY). Lending revenue is the reserve-factor share of borrow interest across the core, Pendle AUSD, Pendle shMON and syzUSD pools. DUST is valued at $0.02705.