{"postId":"opengov:374","kind":"opengov","title":"Hydrated Strategy pt. 3 — POC: Borrow 211,519.13 PRIME for the staked BRL strategy","body":"# Hydrated Strategy pt. 3 — POC: Borrow 211,519.13 PRIME for the staked BRL strategy\n\n## TL;DR\n\nThis referendum has the Treasury borrow **211,519.13 PRIME (≈ $222,222 at $1.0506)** from the Hydration money market against its existing collateral and transfer it to an IGL-controlled multisig. IGL will swap the PRIME for USDC and allocate it to the staked BRL strategy managed by Crown — the first live deployment (proof of concept) of Hydrated Strategy pt. 3:\n\n[Discussion #262](/discussions/s262)\n\nNo treasury assets are spent or transferred out. The Treasury takes on a debt position it services and repays; the borrowed funds are put to work earning real-world yield.\n\n## What this referendum does\n\nOne atomic call via `dispatcher.dispatchAsTreasury`:\n\n1. **Borrow** 211,519.13 PRIME from the money market at variable rate, debt owed by the Treasury account\n2. **Transfer** the borrowed PRIME to the IGL multisig: `12hN9owFtAT7LpXy65BguSC9GWVUbfEdUbMaw7DmFHNyWR6s`\n\nThe batch is all-or-nothing: if the borrow does not execute, the transfer cannot execute either and the whole call reverts.\n\n## Why borrow PRIME?\n\n- **It is the deepest borrowable asset on Hydration.** The money market holds ~9.36M PRIME supplied with next to nothing borrowed, versus only ~2M each of USDT and USDC. Borrowing PRIME taps abundant idle liquidity instead of draining the protocol's scarce external stablecoins.\n- **Predictable borrowing cost.** With utilization going from ~0% to ~2%, the borrow rate stays ≈ 0%, so the cost of carry is essentially PRIME's native appreciation — steady and known in advance, unlike demand-driven stablecoin borrow rates.\n- **Extremely liquid.** PRIME swaps to USDC with minimal impact, giving the strategy a clean USD leg.\n- **A hedge on PRIME risk.** Because the Treasury owes PRIME while holding USD-denominated exposure through the strategy, the position is effectively short PRIME: any downside to PRIME's value reduces the debt in dollar terms and benefits the position, offsetting other PRIME-related risks the protocol carries.\n- **Treasury balance sheet stays intact.** This is leverage against existing collateral, not a spend. The Treasury keeps its assets and their upside.\n\nPost-execution treasury position: ~$2.82M collateral, ~$932k total debt, **health factor ~2.50**.\n\n## The strategy\n\nAs laid out in Hydrated Strategy pt. 3 ([Discussion #262](/discussions/s262)) and the May–Jun newsletter (https://hydration.substack.com/p/hydration-newsletter-may-jun-2026):\n\n- IGL — whitelisted/KYC'ed by the Crown project to use their product — swaps the PRIME to USDC and allocates to the **staked BRL strategy by Crown**, backed by Brazilian sovereign debt yield\n- Yield returns in USDC/USDT as recurring protocol revenue\n- In a later phase the position will be **represented on-chain** inside Hydration, making it composable so the protocol can run capital-efficient structures on top of it (e.g. looping)\n\nThis POC sizing (~$222k) lets us validate the full pipeline — borrow, off-ramp, deployment, reporting, repayment — before scaling.\n\n## Execution & verification\n\nThe call was dry-run against a fork of current mainnet state and executes cleanly end-to-end: the borrow event fires, the multisig receives the full amount, and the treasury debt position opens as expected.\n\n- Preimage hash: `0x62e4ac40defc1a0bc27bb034aaa3d6e74a9e662c353762b66d84d926b3cbbf39` (333 bytes)\n- Track: Treasurer\n\n## Repayment\n\nThe debt position sits transparently on-chain against the Treasury account and can be monitored by anyone. When the strategy position is unwound (or once it is represented on-chain), the PRIME is repaid via a follow-up referendum calling `Pool.repay` through the same treasury dispatch mechanism.\n","bodyFormat":"markdown","tldr":"","labels":[],"linked":[],"author":{"account":{"accountId":"0x8aee4e164d5d70ac67308f303c7e063e9156903e42c1087bbc530447487fa47f","address":"149AQApEw4Xe1DxWesqywiuGQHazbETMgWgT89WjEYFAc29y","emoji":"🍁","emojiName":"heimdall","emojiUrl":"https://cdn.discordapp.com/emojis/1005035405864869939.webp?size=32","tag":null,"identity":{"display":"lolmcshizz","verified":true,"email":"","web":"","twitter":"@lolmcshizz"},"profile":null},"legacyName":null},"authority":"subsquare","revision":0,"createdAt":"2026-07-28T15:00:24.000Z","editedAt":null,"lastActivityAt":"2026-07-31T04:52:21.000Z","commentsCount":0,"updatesCount":0,"upvotes":0,"threadKey":"opengov:374","source":{"name":"subsquare","id":"6a68c435781cee3ac4f3842e","cid":null,"removed":false},"bannerCid":null,"banner":null,"poll":null,"locked":false,"media":{},"hidden":false,"generation":"6690c444c3e1fdf2"}