A Brazilian payment company that keeps settlement float in BRZ has faced a narrow choice: leave the balance idle or sell it for dollars and give up the real position.
Foreign companies with payroll in Brazil had the mirror problem, since raising reais usually meant an offshore NDF or a local brokerage account.
BRZ, the Brazilian real stablecoin issued by Transfero, can now be supplied and borrowed in two isolated Morpho markets on Polygon, curated by Feather. Lenders earn a rate paid in reais by borrowers, who post tokenized Brazilian treasury notes or a yield-bearing dollar token as collateral.
What does the Morpho vault change for the Brazilian real stablecoin?
The vault is a lending pool in which BRZ is the only loan asset. Feather announced the markets in its launch post and acts as Morpho curator: it sets liquidation thresholds, monitors solvency and runs the interface.
Morpho provides the base layer. Its contracts are immutable, and each market is isolated from the others, with its own oracle, collateral and liquidation LTV.
Two collateral assets are accepted at launch. TESOURO, issued by Etherfuse since November 2024, represents short-dated, zero-coupon Notas do Tesouro Nacional held at B3, typically maturing in 90 days or less.
Etherfuse reports monthly reserve attestations at 106%, and RedStone publishes the token’s NAV every block.
sfrxUSD is the yield-bearing form of Frax’s frxUSD. It is backed by tokenized U.S. Treasury products such as BlackRock BUIDL and Superstate USTB, plus components that add basis and protocol risk.
BRZ launched in 2019 and keeps its 1:1 peg with the real through controlled minting and burning. Direct mint and redemption go through Transfero with KYC/KYB, while secondary on-chain transfers need no identity check.
Transfero’s guide on how fiat-backed stablecoins work covers the backing models in more depth.
Why has BRL liquidity been hard to put to work on-chain?
Brazil runs one of the highest policy rates among major economies. The Copom set the Selic at 13.75% on September 16, 2026, according to the Central Bank of Brazil (BCB). Until this launch, none of that rate reached a wallet holding reais.
For companies holding BRZ, idle float has a cost: inflation erodes it while the balance waits for settlement. Converting to USDT or USDC stops the erosion but replaces the currency exposure the business actually needs.
Foreign capital has relied on the non-deliverable forward (NDF), a cash-settled contract quoted against the dollar. Because the real operates under capital controls, NDFs became the standard route to Brazilian rates.
They demand a counterparty, margin and usually an offshore banking relationship, and smaller treasuries rarely meet those requirements.
Regulation adds another layer. BCB Resolution No. 521, of November 10, 2025, in force since February 2026, treats transfers of virtual assets referenced in foreign currency, such as dollar stablecoins, as foreign exchange operations.
Any structure that turns dollar collateral into reais spent in Brazil must fit that framework. Transfero’s overview of VASP regulation in Brazil explains the rules that apply to service providers.
If your operation already holds BRZ as settlement float, see how BRZ connects BRL liquidity to DeFi protocols before sizing a supply position.
How do the two BRZ markets differ?
Both markets use BRZ as the loan asset, so every unit supplied competes for the same borrower demand. What changes is the collateral behind each loan.
Criterion | TESOURO / BRZ | sfrxUSD / BRZ
|
|---|---|---|
Collateral | Tokenized short-dated Brazilian treasury notes | Yield-bearing dollar token |
Currency match | Both legs in reais | Dollar collateral, reais debt |
Main risk | Duration and Brazil’s Ba1/BB sovereign credit | USD/BRL exchange rate |
Oracle | RedStone NAV for TESOURO | Chainlink BRL/USD for BRZ |
Liquidation LTV | Set by Feather for this market | About 86% |
Typical user | BRL treasuries financing a bond book | Dollar companies with costs in Brazil |
The TESOURO market is a matched-currency book. As the notes accrue, the health factor tends to rise instead of swinging with the exchange rate.
Feather reported a collateral yield near 12.67% against a borrow rate near 8.76% at launch, and that spread explains why looped positions appeared first. A Copom easing cycle or higher BRZ borrowing costs would narrow it.
The sfrxUSD market is a cross-currency book. A company keeps its dollar treasury, which Feather quotes at about 4.10%, and draws reais for payroll, suppliers or merchant settlement without a spot FX trade.
Because the liability sits in reais, an appreciation of the real pushes the position toward liquidation even without any credit event. Finance teams should size or hedge it as the currency position it is.
What does a BRZ supply position look like in numbers?
Supplying BRZ is the unlevered side of the market. The lender deposits, earns the utilization-weighted rate borrowers pay and faces no liquidation.
There is no lock-up, but withdrawals depend on free liquidity. At the 90% utilization target, about one tenth of supply is available immediately, and more frees up as loans are repaid.
Returns have a second component. A Merkl incentive campaign pays 100% of the CDI, Brazil’s interbank reference rate, on idle BRZ balances each month. The plan is to step it down toward roughly 80% of the CDI.
Take an illustrative treasury that supplies BRL 1 million in BRZ, with the CDI at 14% and market utilization at 70%.
The BRL 700,000 lent out earns the organic borrow rate. The BRL 300,000 left idle receives the full CDI through Merkl, about BRL 42,000 on an annualized basis.
If the incentive falls to 80% of the CDI, that idle portion earns 11.2%, or about BRL 33,600 a year. The blended return moves with both utilization and the CDI.
Holding TESOURO directly captures a yield closer to the full sovereign rate, but it involves primary issuance paperwork and a duration instrument. Supplying BRZ gives up part of that return in exchange for staying in a stablecoin.
Which risks stay with lenders and borrowers?
The rate a supplier earns is a claim on interest paid by borrowers, not an obligation of Transfero. Suppliers therefore underwrite the quality of both collateral types.
In a Brazilian sovereign or B3 stress event, delayed liquidations could leave bad debt in the market.
Liquidity is the second constraint, since high utilization can delay withdrawals.
Currency is the third: a dollar-based lender of BRZ earns a reais return and carries BRL exposure, intended or not.
Operational factors complete the list. Direct BRZ redemption involves an on-chain burn and off-chain BRL settlement through authorized channels, subject to KYC/KYB and processing times.
TESOURO mint and redemption require Etherfuse KYC and exclude some jurisdictions, including the United States.
Prices depend on the Chainlink and RedStone oracles. Feather’s conservative parameters lower the probability of losses without removing these risks.
This article describes market mechanics and does not constitute investment advice.
How Transfero supports companies holding BRZ
Transfero issues and manages BRZ, the asset every position in these markets is denominated in.
For a treasury, that means a direct channel between reais in a bank account and BRZ on Polygon, so capital can enter or leave the Morpho markets without relying only on DEX liquidity.
Direct mint and redemption of BRZ after KYC/KYB, through the BRZ stablecoin program
BRZ available on more than 16 blockchain networks, including Polygon, where the Morpho markets run
An API that connects Brazilian banking rails and blockchain networks for on-ramp and off-ramp flows
Technical and operations support for teams moving BRZ between exchanges, wallets and protocols
Questions to ask before supplying or borrowing BRZ
Does your treasury measure results in reais or in dollars, and does the position match that base currency?
What share of the balance might you need to withdraw on short notice, given that exits depend on utilization?
How much Brazilian sovereign credit risk will you accept through the collateral?
For a cross-currency borrow, which USD/BRL move takes your position to the liquidation threshold?
Who on your team monitors the health factor, the spread or the exchange rate, and how often?
Do your KYC/KYB and jurisdiction checks cover direct mint and redemption with each issuer?
How does Resolution 521 apply to flows that turn dollar collateral into reais spent in Brazil?
Talk to Transfero’s team about minting, redeeming and moving BRZ for your treasury, and we will map the flow with you → transfero.com/contact
Frequently asked questions
What is BRZ?
BRZ is the Brazilian real stablecoin issued by Transfero since 2019. It keeps a 1:1 peg with the real through controlled minting and burning and runs on more than 16 blockchain networks. Companies use it for payments, settlement, trading and access to DeFi protocols such as the Morpho markets on Polygon.
Who pays the rate earned by BRZ suppliers?
Borrowers pay it. The organic rate comes from interest on BRZ loans backed by TESOURO or sfrxUSD, weighted by market utilization. On top of that, a Merkl campaign pays a percentage of the CDI on idle balances. The rate is not an obligation of Transfero and varies with demand.
Can BRZ suppliers be liquidated?
No. Liquidation applies only to borrowers whose collateral falls below the liquidation LTV. Suppliers carry other risks: withdrawals limited by utilization, possible bad debt if collateral is liquidated late in a stress event, and currency exposure for lenders whose base currency is the dollar.
Do companies need KYC to use the BRZ markets on Morpho?
Not for secondary activity: BRZ transfers and the use of TESOURO as collateral are permissionless. Direct mint and redemption of BRZ require KYC/KYB with Transfero. Minting or redeeming TESOURO requires KYC with Etherfuse, which restricts some jurisdictions, including the United States.
