Heartwood
[ DOCUMENTATION ]
Protocol documentation
Everything you need to understand how Heartwood prices credit, values collateral and handles the bad days. Short by design; the contracts are the final source of truth.
Overview
Heartwood is a non-custodial lending protocol on Robinhood Chain, an Arbitrum Orbit Layer-2 built for tokenized real-world assets. Lenders supply assets into ERC-4626 vaults and earn variable yield. Borrowers post tokenized treasuries, equities, gold or credit as collateral and draw stablecoin liquidity against it.
Seven markets are listed at launch, grouped into three risk tiers. Each tier has its own interest rate curve, reserve factor and, where needed, an isolated liquidity pool.
How it works
Supply
Deposit a listed asset and receive a vault share token that appreciates as interest accrues, every block. Withdrawals are instant while pool liquidity allows; the rate curve is designed to keep exit liquidity available.
Borrow
Enable an asset as collateral and borrow up to its maximum loan-to-value. There is no fixed term and no application. Interest accrues continuously at the current variable rate.
Health factor
Every position is summarized by one number:
HF = Σ (collateral value × liquidation threshold) / total debt
Above 1.00 the position is safe. Below 1.00 it becomes eligible for liquidation. You can repay debt or add collateral at any time to raise it.
Interest rate model
Borrow rates follow a kinked curve driven by pool utilization U. Below the optimal point U* rates rise gently; above it they rise steeply to protect lender exits.
R(U) = R₀ + min(U, U*) · s₁ / U* + max(U − U*, 0) · s₂ / (1 − U*)
Supply APY = R(U) · U · (1 − reserve factor)
| Tier | Base R₀ | Slope s₁ | Slope s₂ | Optimal U* | Reserve factor |
|---|
Example: the Prime pool at 72% utilization prices borrows at and pays suppliers .
Risk parameters
Loan-to-value and liquidation parameters are set per asset from 30-day realized volatility and the underlying redemption window, and reviewed monthly by the risk council. Every change passes the 48-hour public timelock.
| Asset | Tier | Max LTV | Liq. threshold | Liq. penalty |
|---|
Oracles
- Dual sourcing. Every RWA market is priced from a Chainlink market feed plus a signed NAV attestation from the asset issuer.
- Conservative valuation. Collateral is valued at the more conservative of the two sources.
- Automatic halts. If the two sources diverge by more than 2%, new borrows in that market pause automatically. No vote is needed.
- Market hours. Tokenized equities use widened liquidation bands outside exchange hours so a thin overnight print cannot trigger cascades.
Liquidations
When a position's health factor drops below 1.00, it can be liquidated through a descending-price Dutch auction. The auction sells the minimum collateral required to restore health, and the borrower pays the asset's liquidation penalty: roughly 1 to 2% for Prime assets, 4 to 6.5% for Blue-chip, and 9 to 10% for Yield-tier collateral.
Auctions replace fixed-bonus liquidations: penalties are smaller for borrowers and there are no gas wars between keepers.
Insurance reserve
10 to 20% of all interest, depending on tier, accrues to a first-loss reserve. If a shortfall ever occurs, the reserve absorbs it before any lender is impacted. Reserve balances are on-chain and verifiable at all times.
Supply and borrow caps
Every market carries hard caps sized to the underlying asset's real-world redemption capacity. On-chain leverage can never outgrow the liquidity that actually exists off-chain. Caps are reviewed alongside the monthly parameter cycle.
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