With SuperStocks, you can deposit tokenized NVIDIA into a vault that uses it as collateral to earn additional yield.
The question is: is the yield worth the risk you’re taking?
Here’s how the strategy works, what can go wrong, and how Superform is designed to manage those risks.
Where does the yield come from?
SuperStocks generates returns through lending markets, on top of the stock’s business and dividend exposure.
Using superNVDA as an example, the strategy works in three steps:
- Deposit stock. Your tokenized NVIDIA is supplied as collateral to Aave’s lending market.
- Borrow USDC. The strategy borrows a portion of the stock’s value in USDC, keeping borrowing within predefined limits.
- Earn interest. The borrowed USDC is deployed into approved lending markets, such as Morpho or Aave, where it earns interest from borrowers.
The difference between the interest earned and the cost of borrowing, after fees and other expenses, is the strategy’s net carry.
For example, if a strategy borrows USDC at 4% and earns 7% by lending it, the gross interest spread is 3% annually on the amount borrowed. These rates fluctuate with market conditions.
Crucially, SuperStocks does not use borrowed USDC to purchase more NVIDIA. It earns through a lending strategy rather than increasing the amount of stock purchased with leverage.
What about USDC and UP rewards?
SuperStocks returns may also include promotional incentives paid in USDC or sUP tokens.
These are separate from the underlying lending strategy.
- Native strategy yield comes from the interest earned on deployed USDC, minus borrowing costs and applicable fees.
- USDC incentives are additional promotional rewards that may be offered for participating in a vault.
- sUP token incentives are additional token-denominated rewards whose value can fluctuate with the market.
What risks are you taking?
1. Stock market risk doesn’t go away
If NVIDIA falls 20%, your exposure generally falls with it. Earning yield doesn’t change that.
2. Borrowing introduces liquidation risk
This is the most important additional risk. When a strategy borrows against stock, the value of its collateral must remain sufficient to support the outstanding loan.
For example: you deposit $10,000 of tokenized NVIDIA, and the strategy borrows $3,000 USDC against it. Your starting loan-to-value ratio (LTV) is 30%. LTV measures how much debt is outstanding relative to the value of the stock securing it. Now imagine NVIDIA falls 30%.
| Item | Before decline | After 30% decline |
|---|---|---|
| NVIDIA collateral | $10,000 | $7,000 |
| USDC borrowed | $3,000 | $3,000 |
| Loan-to-value | 30% | 42.9% |
Illustrative figures, excluding interest, fees, and strategy adjustments.
Even though the strategy hasn’t borrowed any additional money, its LTV has increased because the stock is worth less.
If the LTV rises too far, the lending protocol can liquidate some of the stock collateral to repay the loan.
That creates a risk beyond simply holding NVIDIA: you could lose some of your stock exposure through liquidation, even if NVIDIA’s price later recovers.
Superform is designed to manage this risk automatically, rather than requiring users to monitor their borrowing positions themselves.
3. Lending returns can change
The strategy earns when lending income exceeds borrowing costs. Neither rate is fixed.
Borrowing rates may increase when demand for USDC rises. Lending rates may decline as additional capital enters the market.
If the spread becomes unattractive, Superform can reduce borrowing or unwind the position.
Superform is designed to manage this risk automatically, rather than requiring users to monitor their borrowing positions themselves.
How does Superform manage these risks?
SuperformOS automates borrowing, lending, monitoring, and redemption according to predefined rules rather than giving a vault operator unrestricted discretion over deposits.
1. Automated borrowing and liquidation management
Superform monitors the amount borrowed against the value of the deposited stock.
For superNVDA, the strategy described here uses two levels of automated protection.
Partial deleveraging: When LTV crosses 40%, the strategy attempts to repay enough USDC to bring LTV back to 35%.
Emergency unwind: If borrowing risk reaches a more severe threshold, the strategy attempts to close the debt position entirely.
Returning to our earlier example, if NVIDIA falls 30% and LTV rises to approximately 43%, Superform’s automation is designed to reduce the outstanding USDC debt.
The objective is to reduce liquidation risk while preserving as much of the underlying stock position as possible.
In those situations, some collateral may be liquidated before the strategy can complete its planned adjustment.
2. Restricted investment permissions
Every lending venue is defined through onchain permissions. The strategy cannot deploy to unapproved destinations, purchase more NVIDIA with borrowed funds, or transfer assets without authorization. Any expansion of those permissions requires a proposal and waiting period, visible onchain before it takes effect.
Investors can inspect the approved operations through SuperformOS.
3. Independent valuation and emergency controls
Superform uses multiple validators to verify each vault’s price per share, which reflects its net asset value after accounting for its positions and liabilities.
Updates require agreement from a sufficient quorum of validators. If valuations become inconsistent, deviate excessively, or stop updating, protective controls can pause affected vault operations.
This helps prevent transactions from relying on unreliable vault accounting.
It is distinct from the external market price feeds used to value stock collateral, which carry their own risks.
Superform also provides emergency controls that allow authorized operators to pause strategies, block specific actions, and initiate permitted exits when abnormal conditions arise.
Can you withdraw your stocks at any time?
You can submit a redemption request, but withdrawals aren’t necessarily instant.
Because stock is being used as collateral, the strategy may need to withdraw USDC from lending markets and repay outstanding debt before releasing the underlying assets — Superform automates this.
However, during periods of market stress, limited liquidity, or infrastructure disruption, redemptions may take longer to complete.
The vault’s redemption process is designed to account for outstanding liabilities before returning assets to users.
Liquidity should therefore be considered alongside yield when evaluating whether to participate.
Understanding the trade-off
Borrowing can lead to liquidation. Lending returns can fluctuate. Underlying protocols can fail. Withdrawals may be delayed.
SuperformOS is built to manage these risks: keeping the strategy within programmatically defined limits, and automating the risk management that would otherwise fall on the investor.
But earning yield on stocks is ultimately a trade-off: additional returns in exchange for programmatically managed risk.
Learn more about SuperformOS and review Superform’s security architecture and audits.
SuperStocks is available only to eligible users in supported jurisdictions. Returns are variable and capital losses are possible. This article is for informational purposes and does not constitute investment advice.