How? By giving borrowers access to an instant liquidation buffer.

Twyne lets lenders (Credit LPs) with unused borrowing power delegate it to people that want to improve their debt positions. In other words, borrowers on Twyne can rent other lenders’ credit power to claim higher Liquidation Loan-to-Value Ratios (LLTVs) and protect their loans from downswings.

This effectively means that anyone can use Twyne to avoid liquidation events. If a user ever gets dangerously close to liquidation, they can simply teleport their position to Twyne, reserve more credit and instantly get an extra liquidation buffer. Instead of hard-hitting the limit at (for example) 83% Loan-to-Value (LTV), the borrower would now get liquidated only if their position crosses (for example) 93% LTV.But how useful is this ‘extra buffer’ in practice, really? After all, if the user still gets liquidated on Twyne instead of the underlying lending market - just some time later - what's the point?

To answer this, we analyzed a trove of historical liquidation data for WETH collateral, USDC/USDT debt positions on Aave V3 (mainnet).

Turns out - a disturbing amount of past liquidations could’ve been easily prevented with a Twyne buffer.

Methodology

To test our assumption that a fast-acting buffer would (probably) save you from liquidation, we first collected data for all liquidations that have taken place on the AAVE V3 instance on Ethereum mainnet. We used the official AAVE V3 subgraph to extract this data and filter by debt markets.

(For this analysis, we focused only on liquidated debt positions that used WETH as collateral and borrowed either USDC or USDT. We plan to extend the same methodology to other debt markets in future articles.)

At the moment of our backtest, there were a total of 13,386 liquidation transactions recorded on AAVE V3 (mainnet instance). This seems in line with other risk dashboards like the one developed by Block Analitica.

For each historical loan, we queried an archive Ethereum node to construct the user position at the moment of liquidation (liquidation_block-1). We then filtered by specific markets (WETH collateral, USDC/USDT debt), and queried the AAVE subgraph for WETH LTV changes over time. This is needed to compute the fluctuations in each loan’s health factor (HF).

Finally, we needed to extract historical asset prices to track the value of collateral (WETH) over time. For this analysis, we used minute-level data from Binance.

Analysis

Once we had all the data, the first step of the backtest was to measure the Health Factor of each position at the time they got liquidated. Here’s the formula:

This value is typically just below 1 at the time of liquidation, though it might be lower if liquidators didn’t close the position promptly or there was a big price difference between oracle updates.

At the moment that each observed position was liquidated, we pretend that the borrower teleported their entire position on Twyne and picked the maximum LLTV available. For the purpose of this analysis, we assume that maximum to be 93% LTV (relative to their original collateral).

Finally, we simulate what happens to each ‘teleported’ position over the next 30 days. We measure the Twyne Health Factor of the positions at each step - if at any point the loan dips below 1, we mark it as liquidatable on Twyne.

The eventual status of all positions ‘teleported’ to Twyne can be seen on the below chart:

Results

Our analysis looked at 115 historical liquidations that have met our criteria (WETH collateral, USDC or USDT borrow) on AAVE V3 mainnet. In total, the combined value of debt accumulated by these positions was slightly above $3M.

How many of these loans could have been saved by Twyne’s liquidation buffer? Assuming Twyne bumped each of them to 93% LLTV, only 5 out of these 115 positions would still have gotten liquidated to this day. The remaining 110 positions would have avoided losing funds altogether by renting other lenders’ borrowing power and boosting their LLTV. That comes out to a total of $2.84M saved with Twyne - and on a very limited sample size!

Risks

At this point, it is worth considering the risks associated with using Twyne as a liquidation protection protocol. These include both risks to the borrowers and the credit liquidity providers (CLPs) that delegate their unused borrowing power to the borrowers:

• As a borrower, using Twyne gives you a chance to avoid the liquidation altogether. However, in the case you do get liquidated on Twyne, the closing factor is 1 (meaning that the entirety of your position can be repossessed) and the liquidation penalty is implied by the maximum LLTV allowed by the protocol. In our analysis, this value is 93%, implying 7% liquidation penalty (compared to 5-10% liquidation penalty on Aave)

• For the lenders (CLPs), there is no loss as long as the unhealthy position gets liquidated on Twyne. If this is the case, the liquidator repossesses the entire position and the credit is returned back to the credit vault, where CLPs can safely withdraw at any point. The loss for CLPs only occurs in case the liquidation doesn't take place on Twyne, and the combined user position (including the CLP's credit) gets liquidated on the underlying protocol (AAVE in this case). The loss realized by the CLPs in this scenario is highly dependent on LTV exceedance (the ratio between the position's LTV and LLTV), as well as the closing factor and liquidation incentive executed by the underlying lending market liquidation. We talk extensively about this relationship in our whitepaper.

Next Steps

This analysis could be extended further by expanding beyond WETH-USDC/USDT pairs, and analysing all liquidations that took place on AAVE V3. Let us know if you’d like us to cover this in a future article!

Also, the backtest assumes no interest rate cost associated with reserving the credit on Twyne. While this is unrealistic, the actual interest paid by the borrowers would depend on the utilization rate of the protocol, which we can not really predict beforehand. In any case, the interest costs at short time horizons like the one in our analysis (30 days) are marginal and would not change the results of the analysis qualitatively. As a borrower, how much would you be willing to pay for this kind of liquidation protection?

Finally - Twyne is launching soon. These debt positions already bit the dust - but yours doesn’t have to.

If you want to protect your loan and avoid preventable liquidations, join us in our Telegram!

For every $100 deposited to Euler, AAVE or Morpho, only $30-$40 is ever borrowed. Individual utilization rates ebb and flow based on collateral type, liquidity depth or APY, but the point remains:

A lot of people are depositing into the void.

For many lenders, the choice not to borrow (much or at all) themselves stems from a risk-off mindset. You’re already exposed to smart contract risk - why slap on additional attack vectors and get whipsawed by Liquidation Loan-To-Value (LLTV)? Why pay borrow rates when you can sit comfy in lending APY?

Truth is, lending’s inherently risky. But passive lending is more dangerous than you may want to admit.

The opportunity cost of idle capital is not properly baked into your supply APY. If the lending market gets exploited, you’ll concede your assets for disproportionately small rewards, while wasting the opportunity to accrete value at every step.

And while your borrowing capacity lies untapped, there’s a whole contingent of keen borrowers looking for extra collateral to use for liquidation protection.

This is the dissonance that Twyne was built to address - a way for lenders to delegate their borrowing capacity to eager borrowers and unlock latent yield from their collateral.

This article will try to answer the following questions:

• What is Twyne?

• How does Twyne work for lenders?

• What is Twyne’s delegation APY?

• What are the net-new risks for lenders on Twyne?

• When can lenders suffer losses with Twyne?

• How do I sign up?

Enter Twyne

Whenever you supply to a lending market, you’re issued an IOU token (aETH, eUSDC etc) for your position. These tokens have two independent functions:

• They passively accrue lending interest

• They unlock certain borrowing capacity against your collateral

Every lender uses function #1. Few tap into the value-generating opportunities of function #2.

Twyne allows lenders (referred to as Credit LPs) to pass on their unused borrowing power to those that need it and earn additional yield in return, while keeping full control over their underlying assets. Eager borrowers use this additional borrow capacity to raise their effective LLTV and protect themselves from liquidation.

Example: say the underlying lending market’s LLTV is at 80%. With Twyne, lenders can delegate more credit power to borrowers, allowing them to achieve a new LLTV of 95% relative to their original collateral, creating a more robust liquidation buffer.

By delegating their credit power, lenders effectively underwrite the loan of another borrower, which carries additional risk. Twyne addresses this with a custom liquidation mechanism designed to protect Credit LPs and prioritize fullness of their collateral. More on that below.

How Twyne works (for Lenders)

Twyne is built as a credit-delegation layer on top of Euler, using the protocol’s underlying liquidity instead of bootstrapping a lending pool. It has two types of vaults:

• Credit-vault: one master vault storing all lending IOUs from lenders (Credit LPs)

• Collateral vault: one per user, allowing borrowers to reserve IOUs from the Credit-vault

The Credit-vault insulates lender deposits and prevents borrowers on Twyne from directly accessing their collateral - only its borrowing power.

For lenders, Twyne user flow looks like this:

1. Deposit USDC to Euler (receive eUSDC)

2. Deposit eUSDC to Twyne

3. Choose your strategy:

   1. Pure credit delegation

      1. eUSDC is deposited into Twyne’s Credit Vault. Lenders fully forgo their borrowing power and delegate credit, underwriting others’ loans

   2. Delegation + borrowing

      1. eUSDC is split between the Credit Vault (to delegate some borrowing power to others) and the Collateral Vault (to borrow for themselves)

In either case, lenders are issued a new receipt token: twyne_euler_USDC, which earns them delegation yield denominated in the same asset as their initial deposit. This is an orthogonal source of yield, boosting the lender’s overall returns from lending markets to supply APY (Euler) + delegation APY (Twyne).

What is Twyne’s delegation APY?

While we’ll have to wait for Twyne mainnet (soon!) to see how markets price the excess risk that Credit LPs take on, we have performed some preliminary backtests.

These calculations are based on a string of historical liquidations on AAVE v3 mainnet from deployment to November ‘24. In each case, we assume that a rational borrower would’ve paid lenders (Credit LPs) on Twyne a certain APR to boost their LLTV and not get liquidated.

Our methodology is relatively simple:

• Take a snapshot of all positions liquidated on AAVE v3 one block before liquidation

• Track those portfolios through a full year of historical price trajectories (as if the liquidation event never occurred)

• Measure the portfolio’s LTV at each time step

From this dataset, we extracted the maximum LTV of each position over the observed time frame and asked: what amount of additional credit would this user have needed to NOT get liquidated?

If we assume that any borrower would be willing to pay the liquidation incentive (typically 5-10%) as an APR to avoid liquidation, we can calculate an implied APR of 16.75% from the Credit LP’s perspective (once you account for capital requirements). This back-of-the-envelope estimate shows how Twyne can be leveraged as a loan insurance protocol.

While the numbers look promising, we would also expect the premium to be arbed relatively quickly, dampening the final APY. It’s also worth noting that Twyne’s is a utilization-based APY, and will ultimately depend on network effects.

Regardless of rough estimates, Credit LPs on Twyne will be able to earn orthogonal yield while enjoying several layers of liquidation protection from the protocol. Speaking of which:

What are the net-new risks for lenders on Twyne?

By delegating their borrowing power, Credit LPs are effectively underwriting another borrower’s loan, which expands their risk surface (relative to idle lending). The main concern for Credit LPs is that the borrower’s collateral becomes insufficient to cover both the loan AND the liquidation incentive. If that happens, the liquidation incentive will begin eating into the Credit LP’s own collateral.

To protect Credit LPs and mitigate risk, Twyne has designed a liquidation mechanism that should prevent loss of lender collateral in the majority of cases, while also making Credit LPs a proactive participant in the liquidation process.

In practice, the borrower’s position becomes liquidatable on Twyne and the underlying market (Euler) at the same time. However, while Euler's liquidation incentive starts low and increases as the position becomes riskier, Twyne’s initial liquidation incentive is set higher to ensure it takes over as primary liquidator.

Within Twyne, liquidators can either clear risky debt or add collateral to stabilize and inherit the debt position. What we’re dubbing “liquidation by inheritance” allows lenders and anyone with excess borrowing power to join the system as de-facto liquidators.

‘Inheriting’ means the liquidator can practically step into the borrower’s shoes, take over their unhealthy position and themselves add collateral to lower the LTV. This doesn’t necessitate a swap, or even a technical setup to liquidate - only excess credit to participate.

Let’s look at an example:

1. Alice deposits $100 as collateral and borrows $80. Her maximum allowed LLTV is 95%.

2. Bob (Credit LP) deposits $20 collateral and opts to absorb liquidations.

3. Prices move against Alice, causing her debt to rise to $95.01, now exceeding her allowed 95% LTV limit. Alice becomes eligible for liquidation.

4. Liquidation occurs: Alice’s entire position ($100 collateral and $95.01 debt) is automatically transferred to Bob.

5. After the liquidation transfer, Bob’s new position is:

   1. Collateral: $120 ($20 original + $100 from Alice)

   2. Debt: $95.01

   3. Resulting LTV: ~80% (now safer and healthier).

6. Bob effectively gained ~$5 in net worth, because he acquired Alice’s collateral at a discounted rate (below market value). He can now:

   1. Repay the debt immediately to secure his profit, or

   2. Keep the position open, betting on a mean reversion.

This process not only minimizes TVL bleeding but also creates opportunities for CreditLPs and smart borrowers on Twyne to come in and acquire assets at discounted rates - all while preserving the protocol's stability.

When can the lender suffer losses with Twyne?

To protect Credit LPs, Twyne is usually taking the role of priority liquidator, ensuring that the borrower’s position - boosted by lender’s collateral - is resolved or made healthy before being liquidated on the underlying protocol.

In cases of extreme volatility and swift downward market pressure, there might be cases where nobody has inherited a risky debt or triggered a liquidation on Twyne; in such a scenario the underlying protocol kicks in as the fallback liquidator, which would likely incur losses for the Credit LP.

Let’s look at an example:

• Alice has initially borrowed a certain amount on Euler at an 80% LLTV. Alice’s collateral is now liquidatable on Euler at an 80% Loan-to-Value.

• Alice then taps into Bob’s credit capacity on Twyne to boost her borrowing limit by 8%. Alice’s collateral + Bob’s credit has raised her effective LLTV to 88%. Alice’s collateral is now liquidatable on Twyne at an effective 88% Loan-to-Value while, from Euler’s perspective, the combined Alice+Bob position is still liquidatable at 80% LLTV.

• To protect credit LPs and make sure the protocol processes most liquidations, Twyne implements a 5% safety buffer. This means that, in the moment Alice’s position first becomes liquidatable on Twyne (i.e. when Alice’s LTV reaches 88%), the combined Alice+Bob position will still be at 76% LTV on Euler (5% buffer to 80% LLTV).

• The added 5% effectively works as Twyne’s time window to liquidate the position - before Euler takes over.

Once the underlying protocol seizes the liquidation process, it is quite likely the Credit LP will incur some losses. That said, there are still possible cases where the position is liquidated safely on the underlying protocol while the Credit LP is made whole (depending on the actual LLTV of the borrower being liquidated on Twyne).

For instance, in the above example, Euler would liquidate the combined position once the debt gets close to a Loan-to-Value of 90% relative to Alice’s original collateral. As long as Euler’s liquidation incentive isn’t higher than (roughly) 10%, Alice’s initial collateral will be enough to cover the entire debt plus the liquidator fee.

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No matter your collateral, use case, or lending market, your credit capacity always gets kneecapped by the Liquidation Loan-to-Value (LLTV).

Imagine you deposit $1000 worth of WETH into Euler and borrow 500 USDC. You’re deliberately leaving a healthy liquidation buffer to shield yourself from market swings.

At origination, you’re sitting at 50% Loan-to-Value (LTV) - pretty conservative. But then prices move against you. Suddenly, you’re at 75% LTV, with only ~10% margin before Euler’s hardwired 85% Liquidation LTV.

Now, you’re just one bad Trump tweet away from liquidation.

Not good. So what can a rational borrower do to beef up their buffer and get some peace of mind?

Your current market options:

• Option A: Inject more collateral

• Option B: Unwind - sell some collateral to repay part of the loan

But unwinding comes with pain - you’re selling at a loss because and you may trigger tax events.

While this seems like a built-in limit of over-collateralized systems, that’s only half the story.

The reality is, there’s a simple but (so far) inaccessible Option C:

What if you could use other people’s borrowing power to improve your Liquidation LTV, without adding more collateral or unwinding?

Enter Twyne - a credit delegation layer that lets borrowers tap into lenders’ unused credit capacity, boosting their borrow limits while staying overcollateralized.

This article will answer the following questions:

• What is Twyne?

• How Twyne works for borrowers

• How (much) does Twyne boost your borrow limits?

• How is the extra interest rate calculated?

• What are the added risks for borrowers?

• How do liquidations work on Twyne?

• Wen mainnet?

What is Twyne?

Twyne allows idle lenders (referred to as Credit LPs) to pass on their unused borrowing power to users that need it, and earn orthogonal yield in return. Eager borrowers can take this added credit capacity to boost their liquidation LTV and borrow more, while staying fully over-collateralized.

For borrowers, Twyne v1 is a capital-efficient buffer against preventable liquidations. Why would you have to partially unwind or add more of your own collateral to defend your at-risk position?

By letting you rent others’ borrowing power, Twyne reinforces your outstanding loan and makes it healthier in the eyes of the (underlying) lending market, without forcing you to lock in a loss or shovel in extra capital.

Example: You’ve deposited $1000 worth of ETH and borrowed $700 USDC against it, putting you at a 70% Loan-to-Value ratio. The market’s LLTV is hardwired at 80%, so you’re left with a thin safety margin in case ETH tumbles. Twyne lets you reserve more credit from other lenders and in doing so boost your effective LLTV to (example) 95% relative to your original collateral. This gives your position a significantly larger cushion and higher tolerance to major price drops.

If you already maintain a hefty liquidation buffer to protect your loan but wish you could borrow more, you can use Twyne to increase your debt position while lowering your liquidation risk.

Depending on your LTV, a 15% price drop might put you at risk of liquidation on the underlying protocol. But with Twyne, you can borrow more and still stay protected even if prices move by 15%, thanks to the added buffer from delegated credit.

Finally, there are borrowers that have already used up some but not all of their borrowing power. Twyne allows them to borrow for themselves AND delegate their remaining credit capacity to others, earning them an orthogonal source of yield.

How Twyne works (for Borrowers)

Twyne is built as a credit-delegation layer on top of Euler. The protocol allows Credit LPs to delegate their Euler IOUs in a controlled environment, letting borrowers leverage their unused credit capacity.

Twyne has two types of vaults:

1. Credit vault: one master vault storing all lending IOUs from Credit LPs Individual

2. Collateral vault: one per user, allowing borrowers to reserve IOUs from the Credit-vault

The vault infrastructure insulates lender IOUs similar to Credit Accounts on Gearbox. Borrowers never get access to lender collateral directly - only their borrowing power, and only within the confines of their Collateral Vault.

For borrowers, Twyne user flow looks like this (we’ll use eUSDC as example):

1. Deposit USDC to Euler (receive eUSDC)

2. Deposit eUSDC to Twyne

3. Reserve credit capacity from the Credit Vault

4. Additional eUSDC from Credit LPs gets transferred to your Collateral Vault

To Euler, this merger of borrower and Credit LP’s capital simply looks like a singular debt position that’s just gotten more healthy. To the borrower, it instantly boosts their Liquidation LTV relative to their original collateral, allowing them to borrow more than they otherwise could.

There are three ways borrowers can use Twyne:

1. Borrow only with your own collateral — works just like borrowing directly on Euler

2. Borrow with your own collateral and boost borrowing power — tap into others’ unused credit to increase your limits

3. Split between borrowing and delegating your own borrowing power — borrow while also lending out your unused credit capacity to others for additional yield

How (much) does Twyne boost your borrow limit?

Twyne lets the borrower unlock a higher liquidation LTV than the one supported by the underlying lending market. Sticking with eUSDC as an example, it does this by pairing the borrower’s eUSDC within the Collateral Vault with some amount of additional eUSDC from the Credit Vault.

For the underlying protocol (Euler), this still appears like a single position - it just added more collateral.

Example:

• Euler’s Liquidation LTV: 80%

• Twyne’s boosted Liquidation LTV: 90%

• Extra credit needed: (0.9 / 0.8) - 1 = 12.5%

In this case, the borrower can reserve 12.5% additional collateral on Twyne to reach a new 90% Liquidation LTV relative to their collateral.

The maximum LTV that you can achieve with Twyne is set by the protocol’s risk team for each asset and based on internal simulations that stress-test edge cases.

This is entirely handled in the background - all you have to do as a borrower is select the desired (boosted) Liquidation LTV, and Twyne will automatically reserve additional credit from Credit LPs and use it to top up your Collateral Vault.

How is the extra interest rate calculated?

In return for improving your LLTV and boosting your borrow limit, borrowers are charged interest on the reserved credit.

We call this the Borrower Siphoning rate, paid out of the borrower’s collateral directly to Credit LPs. Think of this as a negative supply APY that the borrower pays to access more credit capacity.

Example:

• Boosting from 80% → 90% LLTV requires 12.5% extra credit (see above)

• Exemplary Siphoning rate = 10% APY

In the above case, borrowers are charged the Siphoning rate only on the 12.5% credit that they reserved from the Credit-vault. Spread over the whole collateral, that comes out to just 1.25% APY.

Compare this to average liquidation costs which often incur 2–10% penalties upfront, plus at least part of your collateral. For overextended users, Twyne is a way to beef up the liquidation buffer without needing to unwind or inject more collateral, and do so at an affordable price point.

Siphoning rates are utilization-based, just like in typical lending markets. As more credit gets reserved, rates adjust dynamically to manage liquidity.

What are the added risks for borrowers using Twyne?

Using Twyne raises your liquidation LTV so you can borrow more, but that higher threshold carries risks. If the market falls, liquidators need a larger reward to clear your debt, so they take a bigger penalty from your collateral. Twyne applies a 100% close factor, meaning the whole position is liquidated in one shot. In practice, at these high liqLTVs, if you borrow $95 against $100 of collateral, only $5 is left for the liquidator—roughly the same net loss you would face on other platforms.

If you choose a lower liqLTV and delegate part of your collateral for yield, that delegated share is locked in the credit vault, leaving less collateral to back your own loan. Any new debt can therefore be liquidated at the chosen liqLTV, even while the delegated collateral stays intact. For now, you must release or reserve credit manually; auto-rebalancing to dynamically adjust your liqLTV is on the roadmap but not yet live, so you need to monitor prices and collateral levels yourself to avoid abrupt, full-position liquidation.

How do liquidations work on Twyne?

Within Twyne, liquidators can either clear risky debt or add collateral to stabilize and inherit the debt position. What we’re dubbing “liquidation by inheritance” allows lenders and anyone with excess borrowing power to join the system as de-facto liquidators.

‘Inheriting’ means the liquidator can practically step into the borrower’s shoes, take over their unhealthy position and themselves add collateral to lower the LTV. This doesn’t necessitate a swap, or even a technical setup to liquidate - only excess credit to participate.

1. Alice deposits $100 as collateral and borrows $80. Her maximum allowed LLTV is 95%

2. Bob deposits $20 collateral and opts to absorb liquidations

3. Prices move against Alice, causing her debt to rise to $95.01, now exceeding her allowed 95% LTV limit. Alice becomes eligible for liquidation

4. Liquidation occurs: Alice’s entire position ($100 collateral and $95.01 debt) is automatically transferred to Bob

5. After the liquidation transfer, Bob’s new position is:- Collateral: $120 ($20 original + $100 from Alice)- Debt: $95.01- Resulting LTV: ~80% (now safer and healthier)

6. Bob effectively gained ~$5 in net worth, because he acquired Alice’s collateral at a discounted rate (below market value). He can now: a) Repay the debt immediately to secure his profit b) Keep the position open, betting on a mean reversion

This process not only minimizes TVL bleeding losses but also creates opportunities for Credit LPs and smart borrowers to acquire assets at discounted rates - all while preserving the protocol's stability.

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At its core, Twyne allows:

1. Lenders (Credit LPs) to restake their borrowing power and lend it to others, earning both interest rates and credit-delegation fees, all while retaining full control over their underlying assets.

2. Borrowers, on the other hand, gain access to higher collateral factors, unlocking liquidity that was previously unattainable.

Twyne addresses key challenges: Borrowing Power Utilization: Idle borrowing power represents a missed opportunity for loans to generate additional yield. This results in lower utilization and suppressed interest rates, reducing overall market efficiency. Simultaneously, borrowers often face liquidations due to conservative collateral factors—when just a little extra borrowing power could make all the difference.

Liquidity Fragmentation: Tranches of risk parametrization fragment liquidity, leading to the cold-start conundrum for new markets. In this scenario, no actor in the system is sufficiently incentivized to participate and grow the market.

To overcome these challenges, Twyne introduces Collateral-Top-Up Vaults. Lenders provide extra collateral to borrowers, allowing them to borrow more than they could alone. Technically, this is achieved by credit-delegation. This approach boosts borrowing limits while keeping liquidity in the same lending pool and satisfying underlying security constraints. Different risk parameters coexist in one pool, with risks effectively segregated.

Comparison of borrowing limits for Borrowers operating through established Lending Markets and Twyne.

The Benefits of Twyne:

• Increased Flexibility: Lenders gain enhanced optionality with a broader range of yield sources to choose from. Borrowers, pay to increase their leverage or safeguard their positions from incoming liquidations—especially valuable when a user's position is stuck, and they lack the funds to repay.

• Liquidity Aggregation: Rather than creating fragmented pools with varying parameters, interest rates and liquidity guarantees, Twyne channels borrowing volumes through existing ones, effectively consolidating liquidity.

• Higher Capital Utilization: Redistributing idle borrowing power to where it is needed most increases borrowing volumes, boosting overall utilization rates. This benefits not only Twyne participants but also lenders exclusively using the underlying lending market.

Twyne introduces a new dimension of lending innovation by structuring and distributing credit products on top of decentralized lending markets. This approach optimizes capital flow while effectively segregating risks. Twyne ensures that borrowers cannot withdraw or misuse the collateral provided by Credit-LPs. Liquidations are managed to prioritize selling off the borrower’s collateral first, protecting the Credit-LPs. However, as the underwriters of the riskier positions, Credit-LPs bear the loss in the event of a shortfall.

To mitigate these risks, Twyne provides flexible options for liquidators. Liquidators can either clear the debt or add collateral to inherit the debt position. This design allows anyone with excess borrowing power to step in as a liquidator without requiring a complex technical setup.

You can think of Twyne as a load balancer, redistributing borrowing power to where it is needed to navigate incoming price movements effectively. It can be used aggressively to leverage up or defensively to prevent unnecessary liquidations. This dynamic approach drives higher capital efficiency, providing a trustless and modular solution that benefits lenders, borrowers, and the underlying lending markets Twyne integrates with.

Conclusion: Twyne empowers lending market users with the freedom to focus on their individual goals: lenders can re-lend, borrowers can re-borrow, and together they drive the emergence of new markets, ensuring capital flows to where it is needed most.

To learn more about Twyne and our upcoming private beta launch, visit our Twitter or try joining our exclusive telegram community!