> For the complete documentation index, see [llms.txt](https://docs.secured.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.secured.finance/fixed-rate-lending/advanced-topics/base-price-adjustment.md).

# Base Price Adjustment

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](/fixed-rate-lending/protocol-parameters.md).

## 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](/fixed-rate-lending/core-concepts/collateral.md) · [Liquidation](/fixed-rate-lending/core-concepts/liquidation.md)
* [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker.md) — complementary per-block price protection