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# Steakhouse USDG

:::info
For more on [Repo](/docs/products/stablecoin-products/blocks/repo) strategies
:::

:::success
Vault address on Robinhood Chain: `0xBeEff033F34C046626B8D0A041844C5d1A5409dd`
:::

Steakhouse USDG is a [High Yield Instant](/docs/products/vault-products/current/high-yield-instant) lending vault operated by Steakhouse Financial and available through the Robinhood Earn integration. The vault deploys depositor USDG into overcollateralized lending markets on Morpho on Robinhood Chain, anchored in institutional and productive stablecoin collateral with loan-to-value ratios of 91.5%.

Our **High Yield** mandate involves underwriting longer tail and higher-risk assets with higher underlying yields. These assets — for instance, Spark savings tokens or productive stablecoins — have relatively price-inelastic borrowers that supply yield to lenders.

### Vault composition

The vault allocates USDG deposits to overcollateralized crypto-backed loan markets on Morpho on Robinhood Chain, namely:

| Collateral      | Liquidation Loan-to-Value | Risk Rating |
| --------------- | ------------------------- | ----------- |
| spUSDG/USDG     | 91.5%                     | B           |
| syrupUSDG/USDG  | 91.5%                     | B           |
| USDe/USDG       | 91.5%                     | B           |

An updated repository of all our risk ratings for Morpho v1 markets is available in [Morpho V1 Markets](/docs/markets/morpho-v1).

### Reallocation

We run automated rebalancing bots to reallocate liquidity to different borrow markets depending on market demand. The effect our algorithm has is to slowly equalize the borrowing rates across all markets over time. The interest rate model is reactive to other suppliers of lending capital as well as borrow activity in different markets.

### Liquidity

As a reminder, Morpho markets target 90% utilization, meaning that generally 10% of deposited assets are available to meet immediate withdrawals requests. The standard interest rate model seeks to trigger borrower repayments when utilization is >90% by increasing the interest rate charged; the inverse is true when utilization is \<90%.

![](https://lh7-qw.googleusercontent.com/docsz/AD_4nXeZPFvagCo0KifdSJKqNinsVSZxZK47fPc9QE4L8PkGpqDGpnO_WRgkX0X4r4FIy6ndHC-86ss__VF3OUgpaWUewBfoo6ugfFQgRbqTHWbpHAPBTInr3Q5_GJsTf3wcgDCe6C2h8A?key=xXwE5eiaMPdnjtprDyN7vWjG)

For highly-liquid markets with multiple suppliers of capital, most deposits in Steakhouse USDG should be able to remain liquid. Market stress events, when many liquidations happen due to rapid collateral price decline, typically also see withdrawals from most lending vaults, including High Yield vaults. Although the risk of complete inability to withdraw is not 0, the vault's allocation across B-rated markets is sized to maintain liquidity through stress events.

## Risk management

:::info
For more information on our risk management processes, please consult our [Risk Management](/docs/risk-management).
:::

The main strategy the vault follows is to allocate to overcollateralized crypto-backed loans, secured by institutional savings and productive stablecoin collateral spanning B ratings. We evaluate collateral on this basis by underwriting three key criteria:

* **Asset Rating** assesses the quality of the collateral and the role of stakeholders in managing the underlying asset. It evaluates the risk of default by the issuer, as well as potential losses stemming from technological vulnerabilities or poor governance.
* **Platform Rating** focuses on the resilience of an additional DeFi protocol layer. The platform is the application that transforms the native token into a new one with a different economic purpose. It includes an analysis of the platform’s credibility as an issuer and the risks associated with its technological implementation.
* **Market Rating** examines the risk parameters configured on the DeFi lending markets. It evaluates the oracle mechanism, the structure and correlation of trading pairs, liquidity depth, and credit enhancements (measures that mitigate the risk of asset loss or bad debt).

This underwriting process results in a grade from the below table which helps us allocate different lending markets to different tiers of vaults.

| Rating | Numeric Score | Type                                            |
| ------ | ------------- | ----------------------------------------------- |
| **AA** | 1             | **Prime**      |
| **A**  | 2             | **Prime**      |
| **BB** | 3             | **High Yield**   |
| **B**  | 4             | **High Yield**   |
| **CC** | 5             | **Constrained** |
| **C**  | 6             | **Excluded**      |