# Lending and Borrowing Module

### Lending and Borrowing Module Overview

The Lending and Borrowing Module unlocks capital efficiency by allowing users to collateralize their assets to access liquidity, or supply assets to earn interest. This module connects City Protocol vaults and users directly to the deepest and most secure liquidity markets in decentralized finance.

By aggregating access to money markets rather than building an isolated lending protocol, City Protocol ensures that founders can offer their users institutional-grade borrowing capabilities with maximized liquidity and minimized risk.

City Protocol's lending layer connects directly into battle-tested DeFi lending markets, starting with Morpho Blue and Aave V3. Rather than building a proprietary lending protocol, the `CityLendingClient` wraps these existing protocols into a unified interface that handles transaction construction, prerequisite approvals, and account health reads. This sits within the broader capital layer of City Protocol and is typically activated once identity, compliance, and funding flows are already stable.

{% hint style="info" %}
The lending client is built on top of Viem and works across any EVM-compatible chain where Morpho Blue or Aave V3 pools are deployed. All transactions are constructed client-side and signed by the user's wallet. The architecture remains fully non-custodial.
{% endhint %}

***

### Deep Liquidity Access

City Protocol integrates with industry-leading lending protocols to provide robust credit markets:

{% tabs %}
{% tab title="Over-Collateralized Lending" %} <mark style="color:$primary;">**Over-Collateralized Lending**</mark>

Through integrations with AAVE, Compound, and Morpho, users can supply stablecoins or blue-chip assets to earn dynamic interest rates or borrow against their holdings to leverage their positions.
{% endtab %}

{% tab title="Institutional Credit" %} <mark style="color:$primary;">**Institutional Credit**</mark>

Partnerships with platforms like Ledn and Maple Finance open pathways for under-collateralized, institutional-grade credit delegation and specialized borrowing facilities.
{% endtab %}

{% tab title="Bitcoin Native Yield" %} <mark style="color:$primary;">**Bitcoin Native Yield**</mark>

Integration with the Sats Terminal provides specialized lending and borrowing markets tailored for the Bitcoin ecosystem and wrapped BTC assets.
{% endtab %}
{% endtabs %}

***

### Supported Protocols

<table><thead><tr><th width="141.80078125">Protocol</th><th width="169.52734375">Type</th><th>Description</th></tr></thead><tbody><tr><td>Morpho Blue</td><td>Isolated Markets</td><td>Permissionless lending markets with granular risk isolation. Each market is defined by a unique collateral-asset pair, oracle, and risk parameters. Supply and borrow operations are routed through a bundler for batching.</td></tr><tr><td>Aave V3</td><td>Pooled Lending</td><td>Shared liquidity pools where multiple assets are supplied and borrowed against a unified risk model. Aave V3 introduces efficiency mode and isolation mode for tighter capital usage.</td></tr></tbody></table>

***

### Upcoming Protocols to Integrate:

<table data-card-size="large" data-view="cards"><thead><tr><th></th><th data-type="content-ref"></th><th data-hidden data-card-cover data-type="image">Cover image</th></tr></thead><tbody><tr><td><strong>AAVE</strong></td><td><a href="https://aave.com/">https://aave.com/</a></td><td><a href="/files/Crvl89FIluJEQJU2Hcu3">/files/Crvl89FIluJEQJU2Hcu3</a></td></tr><tr><td><strong>Compound</strong></td><td><a href="https://compound.finance/">https://compound.finance/</a></td><td><a href="/files/z1np4h1Ve1hKqe4qXSRw">/files/z1np4h1Ve1hKqe4qXSRw</a></td></tr><tr><td><strong>Maple</strong></td><td><a href="https://maple.finance/">https://maple.finance/</a></td><td><a href="/files/JPVQESurrXVPUAYkWMxq">/files/JPVQESurrXVPUAYkWMxq</a></td></tr><tr><td><strong>Morpho</strong></td><td><a href="https://morpho.org/">https://morpho.org/</a></td><td><a href="/files/Jp3GxSRvV3z9bLrZncI6">/files/Jp3GxSRvV3z9bLrZncI6</a></td></tr></tbody></table>


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