# Idle Cash, Treasury Bills and the Cash Reserve

> Not every lender dollar is lent out at once. The part that is not lent is never left idle.

Canonical: https://spout.finance/docs/idle-cash-and-reserve/

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Not every lender dollar is lent out at once. The part that is not lent is never left idle.

## Where idle cash goes

Most USDC that is not lent to borrowers sits in a tokenized US Treasury fund; a smaller USDC buffer is kept for instant withdrawals. The fund's yield accrues to the pool every day and counts as part of the pool's yield. Spout takes no fee on it. As a safety check, the protocol refuses any Treasury rate above 6% a year.

## The cash reserve

Spout keeps part of the pool available so lenders can leave:

- **Borrowing pauses at 85% utilization.** New loans never take available cash below 15% of the pool.
- **The reserve targets 15% of the pool.** It is held as a USDC buffer for instant withdrawals plus tokenized Treasury bills, and it is never lent. Senior instant withdrawals come out of it.

- **It refills on its own.** Weekly premium, loan repayments and new deposits all flow back into it.
- **Junior withdrawals must leave the reserve intact.** A Junior withdrawal cannot take the pool's available cash below 15% of its value.

## One hard rule

Borrowers are never liquidated to pay for a lender's exit. Their loans are over collateralized and they have done nothing wrong. Lender exits are paid only from the reserve, premium, repayments and new deposits.

## How utilization changes the mix

| Utilization | What it means |
| --- | --- |
| Low | Most USDC earns Treasury bill yield; little is lent |
| Medium | A mix of loans and Treasury bills |
| 85% | The cap: no new borrowing until repayments or new deposits come in |

Lender yield does not depend on utilization alone. Premium depends on how much collateral is in the pools, while Treasury yield depends on how much cash is idle.