Hydrated Strategy pt. 3 — POC: Borrow 211,519.13 PRIME for the staked BRL strategy

TL;DR

This referendum has the Treasury borrow 211,519.13 PRIME (≈ $222,222 at $1.0506) from the Hydration money market against its existing collateral and transfer it to an IGL-controlled multisig. IGL will swap the PRIME for USDC and allocate it to the staked BRL strategy managed by Crown — the first live deployment (proof of concept) of Hydrated Strategy pt. 3:

https://hydration.subsquare.io/posts/262

No treasury assets are spent or transferred out. The Treasury takes on a debt position it services and repays; the borrowed funds are put to work earning real-world yield.

What this referendum does

One atomic call via dispatcher.dispatchAsTreasury:

1. Borrow 211,519.13 PRIME from the money market at variable rate, debt owed by the Treasury account
2. Transfer the borrowed PRIME to the IGL multisig: 12hN9owFtAT7LpXy65BguSC9GWVUbfEdUbMaw7DmFHNyWR6s

The batch is all-or-nothing: if the borrow does not execute, the transfer cannot execute either and the whole call reverts.

Why borrow PRIME?

• It is the deepest borrowable asset on Hydration. The money market holds ~9.36M PRIME supplied with next to nothing borrowed, versus only ~2M each of USDT and USDC. Borrowing PRIME taps abundant idle liquidity instead of draining the protocol's scarce external stablecoins.
• Predictable borrowing cost. With utilization going from ~0% to ~2%, the borrow rate stays ≈ 0%, so the cost of carry is essentially PRIME's native appreciation — steady and known in advance, unlike demand-driven stablecoin borrow rates.
• Extremely liquid. PRIME swaps to USDC with minimal impact, giving the strategy a clean USD leg.
• A hedge on PRIME risk. Because the Treasury owes PRIME while holding USD-denominated exposure through the strategy, the position is effectively short PRIME: any downside to PRIME's value reduces the debt in dollar terms and benefits the position, offsetting other PRIME-related risks the protocol carries.
• Treasury balance sheet stays intact. This is leverage against existing collateral, not a spend. The Treasury keeps its assets and their upside.

Post-execution treasury position: ~$2.82M collateral, ~$932k total debt, health factor ~2.50.

The strategy

As laid out in Hydrated Strategy pt. 3 (https://hydration.subsquare.io/posts/262) and the May–Jun newsletter (https://hydration.substack.com/p/hydration-newsletter-may-jun-2026):

• IGL — whitelisted/KYC'ed by the Crown project to use their product — swaps the PRIME to USDC and allocates to the staked BRL strategy by Crown, backed by Brazilian sovereign debt yield
• Yield returns in USDC/USDT as recurring protocol revenue
• In a later phase the position will be represented on-chain inside Hydration, making it composable so the protocol can run capital-efficient structures on top of it (e.g. looping)

This POC sizing (~$222k) lets us validate the full pipeline — borrow, off-ramp, deployment, reporting, repayment — before scaling.

Execution & verification

The call was dry-run against a fork of current mainnet state and executes cleanly end-to-end: the borrow event fires, the multisig receives the full amount, and the treasury debt position opens as expected.

• Preimage hash: 0x62e4ac40defc1a0bc27bb034aaa3d6e74a9e662c353762b66d84d926b3cbbf39 (333 bytes)
• Track: Treasurer

Repayment

The debt position sits transparently on-chain against the Treasury account and can be monitored by anyone. When the strategy position is unwound (or once it is represented on-chain), the PRIME is repaid via a follow-up referendum calling Pool.repay through the same treasury dispatch mechanism.