Modus

Modus is the native lending protocol on Monad. Alongside standard supply and borrow markets it offers auto-looping strategies for liquid staking tokens to maximize yield, with supply and borrow markets isolated into separate pools per asset, each with its own collateral factor, liquidation penalty and interest rate curve, and with rates stepping by utilization; the looping strategy repeatedly borrows and restakes while borrow rate sits below staking yield and deleverages automatically when the spread breaks its threshold. Liquidation introduces sealed-bid auctions so captured value stays inside the protocol instead of leaking to MEV bots, with part of the penalty returned to the liquidated account and the remainder routed to an insurance fund.

Arbiter sits at the centre of that design, both running sealed-bid liquidations and triggering vault strategies such as hedging on perpetual venues. Sigma Vault uses those hedged perpetual positions to capture funding rates, borrow/lend spreads and liquidation rebates, with users' idle deposits such as ETH and BTC on the other side of the hedge. A dynamic yield allocator routes idle market assets to the highest-yielding source available in the ecosystem.