sbUSDC Yield Vault

Silverback's ERC-4626 tokenized yield vault that automatically generates yield on your USDC deposits through DeFi lending protocols.

Overview

sbUSDC is a yield-bearing token. When you deposit USDC, you receive sbUSDC shares. As yield accrues from lending markets, your shares become worth more USDC - no action required.

Key Features:

• Automatic yield generation (5-10% APY)

• Non-custodial - your funds stay in smart contracts

• Withdraw anytime

• Built on Morpho Blue lending protocol

How It Works

User Flow

1. DEPOSIT:
   User USDC ──► sbUSDC Vault ──► Strategy ──► Morpho Blue
                    │                              │
                    ▼                              ▼
               Mint sbUSDC              Supply to lending market
               shares to user           (borrowers pay interest)

2. YIELD ACCRUAL (happens automatically):
   Morpho Blue ──► Interest accrues ──► Strategy balance grows
                                              │
                                              ▼
                                    sbUSDC share price increases
                                    (totalAssets grows, supply stays same)

3. WITHDRAW:
   User burns ──► sbUSDC Vault ──► Strategy ──► Morpho Blue
   sbUSDC              │               │              │
                       ▼               ▼              ▼
                  Calculate       Withdraw        Return USDC
                  assets owed     from Morpho    + earned interest

Architecture

┌────────────────────────────────────────────────────────────────────────────┐
│                           SILVERBACK CONTRACTS                             │
├────────────────────────────────────────────────────────────────────────────┤
│                                                                            │
│   ┌──────────────┐         ┌────────────────────┐                          │
│   │   sbUSDC     │         │ SilverbackStrategy │                          │
│   │   Vault      │◄───────►│                    │                          │
│   │              │         │  - deposit()       │                          │
│   │ ERC-4626     │         │  - withdraw()      │                          │
│   │ - deposit()  │         │  - balanceOf()     │                          │
│   │ - withdraw() │         │                    │                          │
│   │ - redeem()   │         │  (uses Morpho)     │                          │
│   └──────────────┘         └─────────┬──────────┘                          │
│                                      │                                     │
└───────────────────────────────────── ┼─────────────────────────────────────┘
│                                      ▼
┌────────────────────────────────────────────────────────────────────────────┐
│                         MORPHO BLUE (External)                             │
│                    0xBBBBBbbBBb9cC5e90e3b3Af64bdAF62C37EEFFCb              │
├────────────────────────────────────────────────────────────────────────────┤
│                                                                            │
│   ┌─────────────────────────────────────────────────────────────────┐      │
│   │                    Lending Markets                              │      │
│   ├─────────────────────────────────────────────────────────────────┤      │
│   │  cbBTC/USDC Market     │  Borrowers deposit cbBTC collateral    │      │
│   │  ─────────────────     │  borrow USDC, pay ~8% interest         │      │
│   │  Our USDC goes here ──►│                                        │      │
│   │                        │  Interest paid ──► grows our balance   │      │
│   ├─────────────────────────────────────────────────────────────────┤      │
│   │  WETH/USDC Market      │  Similar - ETH collateral              │      │
│   │  wstETH/USDC Market    │  Similar - staked ETH collateral       │      │
│   └─────────────────────────────────────────────────────────────────┘      │
│                                                                            │
│   Interest Rate Model:                                                     │
│   - Low utilization  → ~2-3% borrow rate                                   │
│   - High utilization → ~10-15% borrow rate                                 │
│   - Supply APY = Borrow Rate × Utilization                                 │
│                                                                            │
└────────────────────────────────────────────────────────────────────────────┘

Where Does Yield Come From?

The yield comes from borrowers paying interest on Morpho Blue lending markets:

1. Borrowers deposit collateral (cbBTC, WETH, etc.) and borrow USDC

2. Borrowers pay interest on their loans (5-15% APY depending on utilization)

3. Interest flows to suppliers (the sbUSDC vault)

4. Share price increases as total assets grow

Expected Returns

Market Conditions	Typical APY
Low utilization	3-5%
Normal	5-8%
High demand	8-12%

APY varies based on market conditions and borrower demand

How Share Price Works

The key insight is that shares stay constant, but their value grows:

Initial State:
- You deposit: 1000 USDC
- You receive: 1000 sbUSDC shares
- Share price: 1.00 USDC per share

After 1 Year (6% APY):
- Your shares: 1000 sbUSDC (unchanged)
- Total assets: 1060 USDC (grew from interest)
- Share price: 1.06 USDC per share
- Your value: 1000 × 1.06 = 1060 USDC

Calculating Your Balance

your_usdc_value = your_sbUSDC_shares × share_price

share_price = total_assets / total_supply

Contract Addresses

Base Mainnet (Production)

Contract	Address
sbUSDC Vault	0x9d520e2b373588917B083E75A425A48b69dFC06a
SilverbackStrategy	0x50E2FEeE58Ecf30373c78aB90754604022d03C4c
USDC	0x833589fCD6eDb6E08f4c7C32D4f71b54bdA02913
Morpho Blue	0xBBBBBbbBBb9cC5e90e3b3Af64bdAF62C37EEFFCb

Market ID (cbBTC/USDC): 0x9103c3b4e834476c9a62ea009ba2c884ee42e94e6e314a26f04d312434191836

Using sbUSDC

Deposit USDC

// 1. Approve vault to spend USDC
await usdc.approve(VAULT_ADDRESS, amount);

// 2. Deposit USDC, receive sbUSDC
const shares = await vault.deposit(amount, yourAddress);

Check Your Balance

const shares = await vault.balanceOf(yourAddress);
const usdcValue = await vault.convertToAssets(shares);
const sharePrice = await vault.sharePrice();

console.log('sbUSDC shares:', shares);
console.log('Worth in USDC:', usdcValue);
console.log('Share price:', sharePrice); // 1e6 = $1.00

Withdraw

// Redeem all shares for USDC + yield
const shares = await vault.balanceOf(yourAddress);
const usdcReceived = await vault.redeem(shares, yourAddress, yourAddress);

Security

Non-Custodial

• All funds are held in smart contracts on-chain

• No centralized party can access your funds

• You can withdraw anytime (subject to liquidity)

Risks

Risk	Description
Smart Contract	Bugs in sbUSDC, Strategy, or Morpho contracts
Liquidity	If all USDC is lent out, withdrawals may be delayed
Market	APY fluctuates based on market conditions
Oracle	Morpho relies on price oracles for collateral valuation

Audits

• Morpho Blue: Audited by Spearbit, Trail of Bits, Cantina

• sbUSDC Vault: Pending external audit

Test Coverage

The sbUSDC vault has comprehensive test coverage:

Category	Tests	Status
Vault Core (deposits, withdrawals, yield)	23	Passing
Security & Edge Cases	15	Passing
Total	38	All Passing

Security tests include:

• Reentrancy protection

• Share price manipulation resistance

• Allowance/approval checks

• Zero value edge cases

• Large value handling (overflow protection)

• Multiple deposit/withdraw cycles

• Strategy interaction safety

FAQ

How often does yield accrue?

Yield accrues continuously, every block. The share price updates in real-time.

Is there a minimum deposit?

No minimum, but gas costs may make very small deposits inefficient.

Can I lose money?

Principal is generally safe unless there's a smart contract exploit. Yield can fluctuate but principal is protected by over-collateralized loans.

How do I track my earnings?

Compare your current convertToAssets(balance) to your original deposit. The difference is your earned yield.