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Project Title: Twyne
Organization name: Twyne Labs
Organization website and/or social media links:
Our marketing campaign will ramp up in the first week of 2025. While these links are currently under construction, here’s where you can find us:
- Landing Page: [Link]
- Testnet PoC: [Link]
- Docs: [Link]
- Twitter: [Link]
About Us + Prior Experience:
The Twyne team brings over 25 years of crypto experience with deep expertise in academia, security, and startups. We operate 0xsidequest [Link], providing risk assessments for DeFi projects like Liquity, and have extensive experience modeling risks for DeFi lending, CDP stablecoins, and DEX liquidity. After years of working with DeFi lending markets, we’ve begun building our own project. Recognized as the Best DeFi Project from Arbitrum at ETHDenver, we also released a Testnet PoC to secure pre-seed funding. Currently, we are in the final steps of a private beta release on Euler and are excited to integrate with the Morpho ecosystem!
Leading Contributor(s):
- Daniele: Physics PhD with expertise in quantitative risk and mechanism design, leads tech due diligence at Gnosis VC. [Link]
- Engn33r: Former yAcademy auditor and core member, former top 10 on code4rena and Sherlock auditing contest platforms, prior expertise in web2 security penetration testing [Link]
- Bunbun: Ex-Ethereum Foundation engineer, smart contract auditor, and zk-researcher. [Link]
- Jakub: Data scientist who leads all aspects of data, from engineering to analysis, brings experience from Giza and 0xsidequest. [Link]
- Taulant: Startup strategist, helped to scale a web2 business to $10M ARR and served as a research analyst at 0xsidequest. [Link]
The team has an academic foundation from prestigious institutions such as NYU, Oxford, Columbia, and Minerva University.
Requested budget:
50k MORPHO, allocated towards audits, smart contract and frontend development.
Scope of Work:
With Twyne we are introducing a credit-delegation protocol that increases capital efficiency by bundling users together. There are users that have idle borrowing power, while simultaneously others need more borrowing power. The protocol enables:
- Lenders: To delegate idle borrowing power to other users.
- Borrowers: To access higher borrowing power.
# How It Works:
Essentially, Twyne’s Over-collateralization vaults act as a top-up of collateral, enabling higher leverage for borrowers.
- Alice deposits $100 of BTC collateral into an 80% LLTV vault. (Liquidation LTV)
- Bob delegates $8 of credit to Alice. ($10 BTC collateral * 80% LLTV)
- Alice now enjoys an effective LLTV of 88%.
- Alice pays a credit-delegation fee to Bob.
This process reallocates borrowing power to where it’s most needed, giving borrowers increased flexibility while providing new yield opportunities for lenders. Twyne ensures that Alice cannot withdraw or misuse Bob’s collateral. Liquidations on Twyne are managed to sell off Alice’s collateral first, protecting Bob’s delegated collateral. However, as the underwriter of the riskier position, Bob bears the loss in the event of a shortfall. To mitigate risk, Twyne adds liquidator options: liquidators can either clear the debt or add collateral to inherit the debt position. This setup enables anyone with excess borrowing power to become a liquidator without the need for a technical setup.
Benefit for the Morpho Ecosystem:
- Yield: Morpho Users can restake idle collateral to earn higher yields
- Utility: Borrowers can pay for additional leverage
- Utilization: Borrowing power is distributed more efficiently, boosting borrowing volumes
- Access: Democratizing liquidations for any Lender
Twyne keeps all collateral within Morpho vaults, and simply redistributes credit to where it’s most needed. This aggregated credit enables new abstractions, enhancing the utility of Morpho’s ecosystem.
When we win, Morpho wins.
Metrics:
- M1: Testnet deployment
- M2: Completed audits
- M3: Reach $5M TVL deposited in the underlying Morpho Vaults within 6 months of launch
Timeline:
- 3 months: Develop smart contracts for Morpho integration and write tests.
- 1 month: Test and audit the protocol, integrate with the frontend, and ramp up marketing.
Future directions (optional):
We aim to become a lending aggregator, akin to how AMM aggregators like 1inch leverage underlying protocols. Aggregators often face a race to the bottom on fees, making value creation the only sustainable approach. By bundling users and utilizing credit delegation, we reactivate idle capital and distribute value across the network. This approach not only delivers better rates and terms than the underlying platforms but also ensures our model remains competitive and sustainable. Our roadmap includes expanding with additional use cases:
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List New Tokens by Underwriting Them: Twyne enables new collateral types to be underwritten using existing collateral, where only opt-in users of the vault assume risk. High-LLTV or low-interest vaults can extend their terms to other tokens, to route borrowing volume through existing vaults. Our Testnet PoC, linked above, showcases this mechanic by enabling SHIBA to borrow on AaveV3 using aUSDC as the real collateral. This approach effectively enables SHIBA to leverage Morpho’s infrastructure under USDC’s terms.
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Cross-Market Operations: Deposit on Euler and borrow from Morpho using a unified interface that deposits into the highest-yielding protocol while borrowing from the cheapest. These operations are backed by unused borrowing power of users in each lending market.
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First-Loss Capital: Lenders can opt in to cover shortfalls in underlying vaults, earning higher rewards as compensation, similar to Aave’s Umbrella Safety Module. Twyne’s Over-collateralization vaults also serve as a first-loss use case compared to standard Morpho users. While integrations may introduce smart contract risk, they help mitigate market and mechanism risks.