Securities lending is one of the largest revenue lines at every major retail broker.
The holder whose shares are being lent sees none of it.
Where the fee goes
How it worksSomeone wants your stock
To bet against a stock you must first borrow it from someone who owns it, then give it back later. You pay rent for every day in between.
The fee already exists
Your broker collects it today and does not consult you. It is legal, disclosed, and ordinary. It is also not a law of nature.
Collateral lets you leave
Borrowers post stablecoin worth more than they take. Your claim is backed by shares or by collateral that buys them back. Redeem any block.
There is currently no way to short a tokenized equity onchain.
Not expensively. Not at all. No borrow means no short, no delta hedge, no cash-and-carry against the listed market.
Locate is the locate. Post stablecoin collateral, borrow shares from the vault, return the same number to close. No maturity, no desk to call.
- Collateral
- Stablecoin, overcollateralized
- Term
- Open-ended
- Rate
- Floats with utilization
- Close
- Any block, return shares
- Counterparty
- The vault
- Settlement
- Onchain, one transaction
The questions a skeptic asks first
FAQWhere does the yield come from?
Borrowers. It is rent on your shares, paid in stablecoins, for as long as someone holds them. Not a token emission, not a subsidy, not paid out of a treasury.
If you cannot see who is paying you and why, assume you are the yield. Here the payer is a borrower with a position and a reason to hold it.
What is the rate?
Whatever borrowers will pay — a function of how badly someone wants to be short and how much supply is already in the vault. It changes block to block.
There is no fixed rate, no target rate, and nobody is promising you a number.
What happens if there is no borrow demand?
You earn nothing. The rate is zero, your shares sit in the vault, and you can withdraw them whenever you want.
This is the normal state for most assets most of the time. A borrow market only pays when somebody wants to be short, and for a lot of tickers, on a lot of days, nobody does.
What happens if a borrower defaults?
Borrowers post more collateral than the shares are worth, and positions are priced continuously. If collateral falls below its maintenance floor the position is liquidated: collateral is sold, the shares are bought back and returned to the vault.
The honest risk is a gap. If the price jumps far enough, fast enough, that liquidation cannot buy the shares back for less than the collateral is worth, the shortfall lands on the vault. Overcollateralization makes that unlikely. It does not make it impossible.
Do I still own the stock?
You hold a redeemable claim on the vault for the same number of tokenized shares you deposited, and you keep the economic exposure throughout. While they are lent out you hold the claim, backed by the borrower's collateral.
A tokenized share is not the underlying equity. It does not make you a shareholder of record and carries no voting rights. What it entitles you to is defined by the token's issuer, not by this protocol.
Can I always withdraw?
Any block, against available liquidity. When the vault is fully utilized a withdrawal triggers a recall on borrowers rather than a queue for you — but a recall takes effect over blocks, not instantly.
Utilization is onchain. Look at it before you assume the exit is empty.