Lending - Clovis Market (Coming Soon)

Clovis Market is a cross-chain lending protocol that enables users to deposit, borrow, repay, and withdraw on any supported chain, while distributing liquidity to the Settlement Layer for instant access and settlement. Market powers lending yields for Exchange and provides the liquidity backbone for instant execution of both Exchange trades and Transport transfers on the Settlement Layer.

How does Lending work?

1. Supply on any chain

   • A user deposits USDC on Arbitrum (Spoke chain A).

   • Clovis sends a cross-chain message from Arbitrum (state update) to the Clearing Layer.

   • Clovis Market does accounting and mints receipt tokens (cloUSDC) on the Clearing Layer to the user.

2. Borrow on any other chain

   • The same user can now borrow ETH on Monad (Spoke chain B) up to their global collateral limit.

   • The intent gets sent to the Clearing Layer, which checks their global collateral state, and processes the borrow transaction (increasing the user debt), and sends the completed transaction message to the Monad (Spoke chain B).

   • Liquidity buffer on Monad, upon receiving the validated message from the Clearing Layer, will send ETH to fulfill the borrow request, then request replenishment from the Clearing Layer if the local buffer falls below the threshold.

3. Interest accrual & rebalancing

   • Interest is calculated once per block on the Clearing Layer (Sei network) with a single utilization-based curve.

   • Clovis Market Rebalancer moves liquidity in or out to restore balance between Spoke chains, if the Spoke chain buffer’s liquidity is above the upper threshold or below the lower threshold. The rebalancer only triggers at these thresholds; most imbalances resolve naturally through user activity, keeping bridging costs minimal.

4. Liquidation

   • Health factors are evaluated on the Clearing Layer using oracle prices.

   • When an account drops below the safety threshold, the Clearing Layer immediately takes the borrower’s receipt tokens, which matches the liquidation process of Aave. These tokens represent claims on the real assets stored in buffers on every chain. Therefore, reacquiring the assets from the buffer and reintroducing them into the main pools completes the liquidation.

cloTokens

cloTokens are interest-bearing tokens issued on the Clearing Layer when users deposit assets, accruing value over time as interest is earned from borrowers. Users can hold, transfer, or utilize cloTokens within the Clovis system. Beyond serving as receipt tokens, cloTokens are integral to Exchange, where they are used as liquidity provider (LP) assets to enable quadruple-yield generation — combining protocol lending interest with trading fees, native-chain lending yield, and bridge fees. Clovis’s cloTokens are already being utilized by Pit finance (onchain options protocol), and Oxium (CLOB) for extra yield.

Universal Rates

Clovis Market offers universal lending and borrowing rates across all supported chains, eliminating the fragmentation typically found in traditional DeFi lending markets. By aggregating liquidity into a single pool on the Clearing Layer and utilizing a global interest rate model with shared utilization metrics, Clovis Market ensures consistent rates regardless of the chain users interact with, providing new arbitrage opportunities for more solvers, searchers, and on-chain MEV. This approach offers several benefits:

• Capital Efficiency: Unified liquidity reduces inefficiencies and optimizes asset utilization.

• Consistent User Experience: Users no longer need to navigate isolated markets with varying rates and conditions.

• Enhanced Liquidity Depth: A single pool provides deeper liquidity, improving borrowing and lending conditions.

Clovis Curated Markets (Tranches)

Clovis Curated Markets are isolated lending environments designed for precise asset onboarding and risk control. Each curated market is segmented into tranches with configurations that define eligible collateral, loan-to-value ratios, liquidation thresholds, integration permissions, and caps. This structure enables Clovis to support a broad mix of assets, ranging from RWAs and BTCfi products to yield-bearing stablecoins, while maintaining risk-adjusted performance across different user profiles.

The segmentation serves two purposes. First, it enables liquidity to be deployed in a manner that aligns with the strategy or partner requirements of each market. Conservative tranches can priorities depth and stability with lower risk parameters, while higher risk tranches can operate with more aggressive settings or integrate with newer protocols. Second, it allows controlled liquidity flow between tranches. Junior tranches can lend to senior tranches to capture their base yield plus a spread, and cross-market routing via the hub and spoke architecture can move capital to where returns are highest without fragmenting TVL.

A key performance driver for curated markets is the looping of yield-bearing assets. Looping involves depositing a yield-bearing asset, borrowing against it, and redepositing the borrowed asset, cycling this process to amplify exposure and returns. Tranches that are optimised for looping can run higher loan-to-value ratios and tighter liquidation thresholds while remaining within safe limits. This design enables Clovis to scale looping activity without jeopardizing systemic safety. Additional yield sources include ecosystem incentive capture during new asset or chain launches, inter-tranche deployments, and cross-chain capital recycling.

Risk is managed through the inherent isolation of tranches. The base tranche allocates to lending, bridging, and vault asset management in blue-chip protocols, limiting risk to systemic-level events. The DEX tranche layers in impermanent loss risk from market making, which only affects users in that tranche. The medium tranche encompasses higher-risk lending pools and asset management integrations, offering the highest yield potential but also the greatest protocol-specific exposure. By structuring yield sources in layers, Clovis ensures that adding additional revenue streams does not automatically increase the risk profile for conservative users.

Although combining lending, bridging, vault management, and DEX fees into a single platform creates multiple yield streams, it also increases the likelihood that one source may experience an adverse event. In a pooled, monolithic design, this would multiply the risk for all users. In Clovis, tranching ensures that these risks are contained, allowing conservative participants to focus on stable, protected returns, while risk-seeking participants can opt into higher-yield, higher-risk environments.