Sturdy is a new kind of DeFi lending protocol that enables users to earn high stable coin yields or take out interest-free loans.
'Lenders' deposit assets they'd like to earn a yield on while 'borrowers' provide collateral and take out the assets deposited by lenders as a loan.
On existing lending protocols, the interest earned by lenders comes from borrowers. So in order for lenders to earn more, borrowers must pay more. Sturdy uses a different model, where yield instead comes from the borrowers' collateral.
When borrowers provide a token as collateral, Sturdy converts it into an interest-bearing token (ibToken) using protocols like Yearn or Lido. Over time, these ibTokens accrue yield; the yield from these tokens is then distributed to lenders in the same token they deposited.