Lombard docs

Lombard is a lending market for tokenized penny stocks on Robinhood Chain. Lenders supply USDG into one vault. Borrowers pledge a small-cap stock token and draw USDG against it, or lever up in a single transaction. A pledge that becomes unsafe is sold in a descending-price auction, and whatever the debt does not need goes back to its owner.

A lombard loan is the old name for credit secured by pledged securities. The idea is the same here, rebuilt for small caps that trade on chain around the clock with thin books and no reliable feed.

Three parts

• The vault holds lenders' USDG and every loan's debt. Lenders own lUSDG shares.
• The counter takes pledges, one escrow per stock, and lends against them within limits set by each stock's book.
• The auction room sells forfeited pledges down a falling price instead of dumping them.

Supplying

Deposit USDG and receive lUSDG, an ERC-4626 share. Interest paid by borrowers raises what each share is worth; there is nothing to claim. Withdraw any time up to the cash the vault holds that is not already lent.

Interest accrues every time anyone touches the vault. 85% of it goes to lenders. 15% is the reserve, which can only be sent to the operator address fixed at deployment.

If an auction cannot recover a loan, the shortfall is written off across all lenders at once. It is never left on the books as debt nobody will repay.

Borrowing

Every position is one owner and one stock. Your AMC backs your AMC loan and nothing else; a halt or a crash on another ticker cannot touch it. Each stock has its own escrow contract that only ever holds that token.

You can borrow up to the stock's loan-to-value ratio, applied to your pledge valued at the lower of spot and the 30 minute TWAP. Each borrow also adds a 0.30% origination fee to your debt.

Your position can be sent to auction once its debt passes the liquidation threshold, measured at the TWAP only:

Repay any time, fully or partly, from any address. Once the debt is zero, withdraw the whole pledge. With debt outstanding, a withdrawal must leave the position within its LTV.

The appraisal

None of the listed stocks has a Chainlink feed, and Robinhood equity feeds hold a price for a day or more over weekends while their tokens keep trading. Each stock is priced from its own Uniswap v3 book against USDG, by a stateless Appraiser contract nobody can set a price in.

• TWAP: the 30 minute time weighted price. Liquidations use it, so one block cannot send anyone to auction.
• Price for credit: the lower of spot and TWAP. Pumping a book lends nothing extra.
• State: Live; Volatile when spot is more than 10% away from the TWAP, which pauses new credit; Paused when the issuer flags a corporate action; Invalid when the book cannot answer.
• Ceiling: the most USDG that may be owed against the stock in total.

The first term uses the harmonic mean liquidity over the same 30 minutes, which liquidity added and removed in one transaction cannot inflate. The second exists because concentrated liquidity makes a book look deeper than the cash behind it. The owner can set a tighter cap, never a looser one.

Leverage

Leverage pledges your stake, borrows USDG against the position, buys the same stock with it in its listed book, and pledges what it bought, in one transaction. It then checks that the book is still Live, that the debt fits under LTV and that the stock's ceiling holds. Any USDG the book could not fill repays the loan at once.

That is about 1.67x on a 40% LTV stock and 1.81x at 45%. Closing sells part of the pledge in its book and repays with the proceeds. It is allowed in any state, provided your debt per pledged share does not go up.

Auctions

Selling a forfeited small cap straight into its book would crash the price it is trying to recover, and every other pledge on that ticker with it. Lombard auctions instead.

1. Open. Anyone opens a lot on a position whose debt passed its threshold at the TWAP. The whole pledge and debt move to the lot, plus an 8% penalty.
2. Walk. The asking price starts at 110% of the TWAP and falls linearly to 50% of that over three hours, then waits.
3. Buy. Anyone buys any part of the lot at the current price in USDG, with a maximum price. Proceeds repay the debt first, then the penalty: 25% to the opener, 75% to the operator.
4. Settle. The moment debt and penalty are paid, the remaining pledge goes back to its owner's position.
5. Short lots. If the pledge sells out first, the unpaid debt is written off across lenders.
6. Restart. A lot still open after three hours can be restarted by anyone from a fresh TWAP.

Rates and fees

Listed stocks

Robinhood stock tokens under ten dollars whose v3 book against USDG keeps a 30 minute oracle.

Limits and risks

What the owner can do

• List a stock, within hard bounds: LTV at most 60%, threshold at most 75% and at least 10 points above LTV.
• Freeze new credit on a stock, set supply and debt caps, and lower an LTV.

What the owner cannot do

• Move a pledge, move lenders' USDG, or change where fees go.
• Change a stock's book or threshold after listing, or raise an LTV.
• Pause repayments, withdrawals of debt-free pledges, closing, or auctions.

Risks you take

• Issuer powers. Robinhood stock tokens can be paused, blocklisted, upgraded, and burned from any holder by their issuer. No contract can prevent that.
• Thin books. Small-cap books are shallow. The ceilings keep credit inside them, but a sharp move can still leave a lot short.
• TWAP lag. The protection against wicks is also a delay: a real crash takes up to 30 minutes to reach the TWAP, and lenders carry that gap.
• Market hours. The stocks' home markets close; their tokens do not. Reopen gaps land in the books and then in the TWAP.
• Smart contract risk. The contracts are not audited.

Contracts

$LOMBARD

LOMBARD is a plain ERC-20 with a fixed supply of 1,000,000,000 minted once at construction. It has no owner, no mint, no pause, no blocklist, no transfer tax and no upgrade path, and it carries its logo on chain.

It holds no privilege over the lending contracts, and they hold none over it. It trades on a Uniswap v4 ETH pair.