🪄Base Price Adjustment

Duration-aware minimum collateral requirements

Zero-Coupon bonds start at a deep discount and converge to par (100) at maturity — which means a borrower's obligation grows in present-value terms over time. To keep positions safely collateralized along that path (and to stop attackers from using artificially low prices to compute collateral requirements), the protocol enforces a minimum collateral base price (BP): when an order's price is below the BP, required collateral is computed from the BP instead.

The formula

BP is linearly interpolated by time to maturity t between two reference points — the BP at maturity and the BP at 1-year duration:

$$BP(t) = P_{M} - \frac{t}{\text{secondsPerYear}} \times (P_{M} - P_{1Y})$$

Reference points depend on the asset's yield category:

Category	Yield range	BP at maturity	BP at 1y duration
A	0–3%	96.00	93.00
B	3–5%	96.00	91.00
C	5–7.5%	96.00	89.00
D	7.5–10%	96.00	87.00
E	10–15%	96.00	84.00
F	15%+	96.00	81.00

Current category assignments (BTC — A, ETH/JPYC — B, USDC/USDFC — C, FIL/axlFIL — F) are reviewed quarterly and revised with community input based on observed APRs. Live values: Protocol Parameters.

Examples

• Category A, 3 months to maturity: BP = 96.00 − 0.25 × (96.00 − 93.00) = 95.25

• Category C, 1 year: BP = 96.00 − 1.0 × (96.00 − 89.00) = 89.00

• Category F, 18 months: BP = 96.00 − 1.5 × (96.00 − 81.00) = 73.50

(Illustrative annualized math; contracts compute in seconds.)

What it means for borrowers

• Your minimum collateral is computed from BP when market prices are below it — a spike-proof floor.

• As maturity approaches, BP rises toward 96.00, so collateral requirements gradually increase. Plan buffers for long-dated, high-yield (high-category) borrows.

• The formula is deterministic — you can project your future requirements exactly.

Related

• Collateral · Liquidation

• Circuit Breaker — complementary per-block price protection