Where yield comes from

Open the carry trade

A stock-backed carry tradeStock collateral, external financing, owned lending and credit claims, an optional extra loan, and the borrowers paying the income.Inside the carry tradeStocks secure a USDC loan. The cash funds direct or managed lending, or a managed credit portfolio. Credit-backed borrowing is optional. Investment income less borrowing costs and fees is carry.Inside the carry tradeOpen the bagOTHER BORROWERSOTHER BORROWERSborrowing account oneSymbolic financial marksborrowing account twoSymbolic financial marksEXTRA-LOAN LENDERSEXTRA-LOAN LENDERSsupplier dollar note 1Symbolic financial markssupplier dollar note 2supplier dollar note 3CREDIT-LOAN DEBTCREDIT-LOAN DEBTprincipal accountSymbolic financial marksSymbolic financial marksCREDIT-BACKED LENDINGCREDIT-BACKED LENDINGsupplied cashSymbolic financial markspooled lending accountSymbolic financial marksloan allocation 1loan allocation 2loan allocation 3EXTRA LENDINGEXTRA LENDINGunderlying loanSymbolic financial marksloan claiminvestment receiptSymbolic financial marksinterest stripCREDIT BORROWERSCREDIT BORROWERSSymbolic financial marksSymbolic financial marksLENDING CLAIMSLENDING CLAIMSunderlying loanSymbolic financial marksloan claiminvestment receiptSymbolic financial marksinterest stripCREDIT INVESTMENTSCREDIT INVESTMENTShome loan documentSymbolic financial markscompany loan documentcredit investment receiptSymbolic financial marksSTOCK-LOAN DEBTSTOCK-LOAN DEBTprincipal accountSymbolic financial marksSymbolic financial marksCASH SUPPLIERSCASH SUPPLIERSsupplier dollar note 1Symbolic financial markssupplier dollar note 2supplier dollar note 3STOCK-BACKED LENDINGSTOCK-BACKED LENDINGsupplied cashSymbolic financial markspooled lending accountSymbolic financial marksloan allocation 1loan allocation 2loan allocation 3BORROWED USDCBORROWED USDCborrowed usdc accountSymbolic financial marksSymbolic financial marksSTOCK COLLATERALSTOCK COLLATERALequity market plotSymbolic financial marks Base ChainCARRY TRADECARRY TRADECARRY TRADECARRY TRADECARRY TRADECARRY TRADECARRY TRADETHANK YOU, TRADE AGAIN PledgeBorrowLendBuy creditPledge creditBorrow and lendInterestLoan incomeInvestment income − borrowing costs − fees = carry
How it works
Investment incomeBorrowing costsFeesCarry
CashIncomeBorrowing costPledge
Follow
Returns and risks
Cash / fundingCollateral pledgeIncomeInterest owed

Carry is investment income less borrowing interest and fees. It can be negative. Stock-price moves, investment losses and rewards also affect the investor’s return. Principal must be repaid when each loan closes.

Some portfolios borrow against their credit investments. Each loan has its own collateral requirements and liquidation risk. Income can accrue in an investment’s value before it is available as cash.

Follow the trade step by step

Who pays the yield?

Extra borrowing is optional

Borrowers pay interest on the loans behind these investments. Borrowing costs, fees and losses reduce the return.