Who Spout Is For

Most people come to Spout for one of five reasons. Many fit more than one. The numbers below are illustrations.

What they share is time. Each of them holds positions for months or years, which is exactly when interest and funding costs add up, and exactly when a loan with no interest matters most.

The long term holder who wants more exposure

You hold a stock you believe in for years and would like more of it, but margin interest would eat into the return. With a leveraged buy, you put in $20,000 at 1.5x. You end up with $30,000 of the stock against a $10,000 loan at 0%, an LTV of about 33%. If the stock rises 20% and no calls are exercised, your position is worth $36,000 and your equity has grown from $20,000 to $26,000, a 30% gain, with no interest to pay.

Leverage works both ways. A 20% fall would take your equity from $20,000 to $14,000. See Buying With Leverage.

The holder who needs cash

You hold $40,000 of a stock that has compounded for years. You need $12,000 for a deposit on a home, but you do not want to sell. You deposit the stock and borrow $12,000, an LTV of 30%. For a stock like AAPL, with a 55.6% liquidation threshold, the stock would have to fall about 46% before any of it was sold. You repay when it suits you, in any amounts, with no interest building up.

The onchain native

Your money already lives in a wallet. You want exposure to the companies that move the market without opening a brokerage account. Buy tokenized stocks in the app, hold them in the same wallet as everything else, and borrow USDC against them when you need it.

The yield seeker

You hold USDC and want yield backed by real activity. You deposit $25,000 in Senior. Your USDC funds 0% loans and earns Treasury bill yield on the part that is not lent. You are paid before Junior, and losses reach you only after Junior is used up. You never hold the stocks, so a fall in a stock's price does not reduce your deposit directly.

Why this yield has been hard to reach. For a fund running covered calls alone, the trade means owning the stock and taking all of its downside for a small premium. Spout splits the trade between two people who each want one half. The borrower keeps the stock and its risk and gets a free loan. The lender holds dollars and collects the premium.

The diversifier

You want some of everything: borrow a little against a long term holding, lend some USDC for yield, and trade a few positions. Borrowing and lending are independent, so you can do both from one wallet.

Who Spout is not for

Day traders. If you open and close a position within a day, financing costs you little anywhere, and Spout has little to add. Collateral works in weekly options cycles, so it is built for positions you keep.

Anyone who cannot accept giving up part of a sharp rally in a cycle where calls are exercised, or who would borrow near the maximum without watching the position.