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umUSD is an ERC-4626 compliant vault token representing your share of the lending pool. When you deposit USDC, you receive umUSD. When you withdraw, you burn umUSD and receive USDC.

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How the Share Price Works

The exchange rate between USDC and umUSD is determined by the vault’s Net Asset Value (NAV): 
umUSD Share Price = Total Vault Assets / Total umUSD Supply
At launch, the share price is $1.00. Over time, as the vault earns fees and profit share, total assets grow faster than total shares. The share price rises.

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Example

TimelineVault AssetsumUSD SupplyShare Price
Day 1$1,000,0001,000,000$1.00
Day 30$1,050,0001,000,000$1.05
Your 10,000 umUSD is now worth $10,500 instead of $10,000.
You don’t receive yield distributions. Your yield accrues as NAV appreciation. This is more tax-efficient and compounds automatically.

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Depositing and Withdrawing

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To Deposit

  1. Connect your wallet
  2. Enter USDC amount
  3. Receive umUSD at current share price

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To Withdraw

  1. Enter umUSD amount to burn
  2. Receive USDC = umUSD × current share price
  3. Funds available immediately (if liquidity permits)

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The Liquidity Constraint

Here’s where Ultramarkets differs from typical DeFi vaults.
In protocols like Aave, borrowed capital stays in smart contracts. High utilization creates high rates, incentivizing repayment. In Ultramarkets, borrowed capital leaves the protocol entirely. When a trader borrows $9,000, that USDC moves to Polymarket and becomes outcome tokens. It’s locked until the position closes. This creates a structural constraint: if 80% of vault capital is deployed to active positions, only 20% is available for withdrawals.
Liquidity TypeDescription
Available liquidityUSDC sitting in the vault, ready to be lent or withdrawn
Utilized liquidityUSDC deployed to active Polymarket positions
If you try to withdraw more than available liquidity, you’ll need to wait for positions to close. This is the tradeoff for earning real yield from active capital deployment.

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Committed Capital Rewards

Your effective yield increases the longer your capital stays in the vault. We track your weighted average deposit age and apply multipliers:
Time in VaultMultiplier
0-30 days1.0x
30-60 days1.1x
60-90 days1.2x
90+ days1.3x
The vault distributes earnings based on effective balance (umUSD × multiplier), not raw balance. LPs who commit longer earn proportionally more.
The key: Withdraw instantly anytime. No lockups, no penalties. We reward commitment without punishing liquidity.

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DeFi Composability

umUSD is a standard ERC-4626 token with a liquid secondary market. This makes it composable across DeFi:

Lending Markets

Use umUSD as collateral on Morpho or Aave to borrow USDC while maintaining vault exposure

Yield Trading

Pendle can tokenize umUSD yield into principal (PT) and yield (YT) tokens

Liquidity Pools

umUSD/USDC pools on AMMs provide instant exit liquidity

Yield Aggregators

Yearn or Beefy can include umUSD in vault strategies