Borrower and Bidder Mechanics

How pooled, yield-bearing ETH becomes borrowable liquidity without breaking capital efficiency or payment reliability.

Once heterogeneous LSTs are ingested and normalized, GigaETH exposes them through a single borrowing surface. This surface is designed to serve two very different constituencies simultaneously: users who want spendable liquidity, and bidders who want predictable access to ETH-backed capital. The protocol does not privilege one over the other. It aligns them.

At the core of this system is the idea that borrowing demand becomes persistent when borrowing is tied to payments. Traditional DeFi lending markets treat borrowing as episodic. Users borrow to lever a position, to arb an opportunity, or to deploy capital temporarily. Once the trade resolves, the position is unwound. This creates bursty demand and fragile liquidity.

GigaETH inverts this dynamic.

Borrowers access liquidity not as a speculative tool, but as an ongoing utility. They borrow against productive ETH to fund real-world spending while maintaining yield exposure. This creates steady, repeatable borrowing demand that does not depend on market timing or leverage appetite.

On the supply side, bidders compete to provide liquidity to this borrowing surface. Bidders may be institutions, market makers, or protocol-native liquidity providers. They supply either canonical ETH or USD-denominated stablecoins. In return, they receive interest payments derived from borrowing activity and, where applicable, payment interchange flows.

Interest rates are not fixed administratively. They are formed through a continuous auction mechanism. Bidders submit offers specifying:

• Asset type (ETH or USD stablecoin)

• Quantity

• Minimum acceptable rate

• Duration constraints

The protocol clears these offers against borrowing demand, prioritizing the lowest-cost liquidity that satisfies risk constraints. This ensures that borrowers receive competitive rates while bidders are compensated for providing capital that must be continuously available.

Collateralization is handled at the aggregate position level, not per-asset. The protocol evaluates a user’s total normalized ETH exposure and applies conservative loan-to-value ratios based on the weakest linked asset. This avoids the common DeFi failure mode where users optimize around individual collateral factors and inadvertently increase systemic risk.

Critically, borrowing does not force liquidation of yield positions. Yield continues to accrue to the underlying LSTs even while liquidity is borrowed against them. This preserves capital efficiency and aligns incentives across all parties.

From a payments perspective, this design is essential. Payment rails require liquidity that is always there, not liquidity that disappears when markets turn volatile. By anchoring borrowing demand to everyday spending rather than speculative leverage, GigaETH creates a borrowing market that behaves more like infrastructure and less like a casino.