DUSD,DETH,and DBIT Machine Updates

Week 18-20, 2026

This report covers the performance and positioning over the past few weeks of DUSD, DETH, and DBIT. Inside, you will find a clear view of performance drivers, allocation shifts, and risk management decisions across each Machine.

DUSD

Over the past 14 days, DUSD delivered a 4.47% APR, supported primarily by looped positions on Morpho, with the largest contribution coming from the Maple, Reservoir, alongside additional exposure to InfiniFI four week lock.

Over the past few weeks, the machine navigated borrow rate spikes across lending venues following the Kelp incident and fully removed exposure to Umbrella. During this period, there were several unknowns around how the situation would evolve.

The borrow spike temporarily affected loops in Morpho, but it did not result in negative prints, as loops were reduced to a less aggressive health factor across positions. At the same time, the temporary spike in our Umbrella positions helped offset the impact, resulting in a net gain during the borrow spike period. Umbrella positions were exited on the 22th of April: tx hash.

Portfolio rotation during those weeks was primarily focused on capital preservation, given the broad market dynamics following the incident. During this period, we temporarily deposited GHO into the savings product offering 5.7%, while continuing to push new integrations to diversify the balance sheet away from a loop centric book and toward an uncorrelated source of yield (e.g: CLOs and ABL).

Over the coming weeks, we plan to roll out the following integrations in the root:

• Royco’s Junior tranche exposure: stcUSD and syrupUSDC

• FalconX CLO

• Exposure to naked mGLOBAL: asset backed lending tokenised fund managed by Fasanara

Overall, DUSD continued to outperform SOFR + 150 bps despite an eventful market environment. In parallel, the team has begun discussions around the potential use of DUSD as collateral across Morpho, while Dialectic is also conducting due diligence on select real-world asset opportunities for potential future integration, with the aim of offering a more blended source of yield while maintaining a highly liquid vault profile. We expect to share further updates on these initiatives in the coming weeks

DUSD Summary:

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DETH

DETH has suspended conversion availability following the Kelp DAO incident, pending evaluation of any contingent exposure transmitted to the Umbrella position, 10% of book.

Based on the current outcome and the unstaking process already initiated, which is expected to complete on Sunday, 10 May, repurchases are expected to be re-enabled shortly after and the strategy should return to full operational status.

During the same period, the spike in ETH borrow rates caused by frozen Aave markets created a negative spread on the ETH looping positions, which had an impact on strategy PnL. To mitigate this, idle wstETH was used to borrow ETH more cheaply and reduce exposure on Aave.

Following the liquidation of the hacker on Core, borrow rates have started to normalize and spreads are moving back into positive territory. As seen several times in the past, these spikes tend to be temporary. Over a longer time horizon, ETH looping has continued to prove itself as one of the strongest scalable ETH strategies, and we remain confident in maintaining exposure to it. That said, allocation will be actively managed depending on overall book size, with a target exposure of approximately 30% at any given time.

Looking ahead, DETH will continue to diversify the opportunity set. The next areas of focus are selective exposure to stablecoin-related carry trades, as well as LP positions in incentive-driven pools across StakeDAO and Convex. These additions should help reduce reliance on a single source of ETH yield while improving capital efficiency and smoothing returns over time.

DETH Summary:

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DBIT

DBIT returns have normalized towards a stable return range over the past weeks as we reduced exposure to USDT. Currently, due to its small size, DBIT only has three allocations: Across Hubpool LP, borrow position on Morpho on Monad taking advantage of cheap borrow rates, and a Steakhouse Reservoir vault position on Morpho Ethereum. DBIT unwound all remaining illiquid positions (Umbrella) a few weeks ago and remains fully liquid. DBIT has exited its DUSD allocation to service conversion demand, with plans to reallocate in the coming weeks.

As noted above, because DBIT allocates capital to DUSD, Dialectic Meccanico will perform the necessary accounting to ensure that DBIT LPs are not charged twice. We will also publish a public repository so that the fee distributions and rebates associated with DBIT’s allocation to DUSD can be tracked transparently.

Overall, our outlook on DBIT remains positive despite the market volatility. With upcoming improvements to DUSD, we expect a further yield uptake.

DBIT Summary:

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DUSD, DETH, and DBIT Machines are being operated on Makina - the DeFi execution engine.

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