Monad Blockchain DeFi Ecosystem Overview: Lending, Yield, and Liquid Staking

Monad DeFi Ecosystem: An Overview

On the first day of the Monad mainnet launch, this article aims to provide you with a quick understanding of the lending market, yield products, and prominent liquid staking offerings within its DeFi ecosystem. Purpose-built to support an influx of millions of users into DeFi, Monad is capable of supporting the large-scale daily operations of major financial applications. With its ability to process 10,000 transactions per second, a block generation speed of 400 milliseconds, and high finality, Monad strives to eliminate common issues in DeFi, such as transaction failures, high slippage, oracle data delays, and high gas fees. DeFi applications running on Monad will operate efficiently at speeds comparable to those of centralized exchanges, all while being fully executed on a decentralized network.

Lending Protocols: Lending and Borrowing Assets in the DeFi Ecosystem

DeFi lending enables the transformation of existing assets into usable liquidity. On Monad, this becomes an important way to amplify risk exposure: users can pledge Liquid Staking Tokens (LSTs) to borrow stablecoins, gain higher yields through looping positions, or adopt multiple collateral strategies based on their level of participation. Lending protocols in the Monad ecosystem offer differentiated product solutions for different user groups.

Curvance

Curvance allows users to convert assets such as MON, LSTs, and interest-bearing stablecoins into leveraged positions through a single transaction. The product interface streamlines traditional repetitive operational steps: no need to repeatedly deposit, borrow, or re-supply. Curvance focuses on high capital efficiency, offering market-leading loan-to-value ratios, and supports various collateral types: Liquid Staking Tokens, interest-bearing stablecoins, yield derivatives, and vault tokens. The Curvance roadmap also includes support for more alternative assets. The Curvance protocol adopts a scalable liquidation mechanism: improving efficiency through batch liquidation, using auction-style settlement to improve recovery rates, and launching a points program to incentivize depositors and borrowers.

TownSquare

TownSquare adopts a more modular solution, which is suitable for users who prefer to actively manage their positions: it enables risk isolation, mixed use of collateral, and customization of each loan. Users can open multiple independent lending positions within a single account, each with its own collateral portfolio and borrowing targets. You can: use Liquid Staking Tokens as collateral to borrow stablecoins, use stablecoins to borrow MON, and mix and match Liquid Staking Tokens and stablecoins for diversification. All operations can be managed through a single wallet, without the need to switch different interfaces. TownSquare uses a unified liquidity pool model, where lenders share the same pool, while borrowers can construct personalized positions. For related assets (such as MON and MON-LST), TownSquare also offers an "Efficiency Mode," allowing traders seeking to expand directional exposure to obtain higher loan-to-value ratios. TownSquare plans to support various Monad Liquidity Staking Tokens and more established assets, and will also integrate with WLFI's USD1 stablecoin, and issue an interest-bearing sUSD1 token, which is specifically designed for direct integration into looping strategies. Other lending protocols that will be launched on Monad: Morpho Euler Gearbox Neverland Money

Yield Products: Exploring Yield Opportunities

In addition to lending services, the Monad ecosystem also offers yield-oriented products, allowing users to easily capture ecological opportunities. These products encapsulate investment strategies, active management, and liquidity into holdable assets, which users can trade or use within the DeFi ecosystem. This makes yield acquisition viable and composable from day one. This section highlights two yield vaults that will be launched upon the Monad mainnet launch.

MON Vault: Actively Managed Asset Allocation

Built by Mellow and operated by Steakhouse, the MON Vault provides an actively managed strategy for users who want to earn yield without manual operation. You are not required to deposit funds into separate pools or strategies, just deposit MON tokens, and the MON Vault will automatically allocate funds to the best options, including liquid staking tokens, lending markets, or ecological incentive programs. The MON Vault mainly focuses on: active allocation of various MON yield opportunities, dynamically adjusting strategies with the launch of liquidity platforms and LSTs, efficient routing to various staking strategies, ultimately forming a low-intervention MON yield strategy, while maintaining liquidity, composability, and portability across the Monad ecosystem, and accurately capturing risk-controlled yield opportunities.

earnAUSD Vault: Yield Enhancement Solutions for High-Liquidity Stablecoins

The earnAUSD Vault, co-developed by Agora and Upshift, provides one-stop stablecoin yield solutions for Monad ecosystem users. Simply deposit Agora's US dollar-issued stablecoin AUSD, and you can obtain freely tradable, interest-bearing earnAUSD tokens without managing investment strategies yourself. The earnAUSD Vault will allocate AUSD assets to various yield channels within the Monad ecosystem. As the ecosystem evolves, future strategies are expected to include more diversified value-added opportunities such as basis trading and structured yield strategies. The design of earnAUSD is based on three core functions: Optimized Allocation: Automatically allocate funds to markets that offer risk-adjusted benefits. Deep Composability: Support cross-chain lending protocols, DEXs, and perpetual futures exchanges. Liquidity Priority Design: earnAUSD can still be used as collateral, can be traded in pools, and obtain support from the entire ecosystem. In addition, the earnAUSD Vault also integrates the native incentive layers from Agora and Upshift, creating a unified yield product for stablecoin users entering the Monad ecosystem.

MON Staking and Liquid Staking

In addition to lending protocols and yield products, the Monad DeFi ecosystem also includes MON staking and liquid staking services. Through MON staking, users can earn staking rewards for maintaining network security. Users can stake directly to validator nodes through Gmonads or MonadVision dashboards. Liquid staking is an alternative to regular staking, where users can obtain corresponding Liquid Staking Tokens (LSTs) by staking assets. LST tokens can be used in conjunction within the DeFi ecosystem, allowing stakers to earn staking rewards while also participating in other DeFi activities. By maintaining the liquidity of LST tokens, users can realize asset transactions, lending, liquidity provision, and many other scenario applications throughout the DeFi ecosystem. There are several protocols that provide LST in the Monad ecosystem: Fastlane → shMON Kintsu → sMON Magma → gMON. Thanks to the widespread integration of these LST tokens in the ecosystem, MON stakers can earn additional yields in addition to basic staking rewards. In addition to the above protocols, the launch of the Monad mainnet will also welcome many DeFi protocols covering multiple categories. The launch of the Monad mainnet is just the beginning: these basic protocols will allow users to start experiencing, optimizing, and laying out, thereby fully unlocking the potential of a full-chain high-performance DeFi environment.