šŸŖ„Base Price Adjustment

Protect User Assets and Protocol from Manipulations

In the case of Zero Coupon Bonds, which begin trading at a significant discount and mature at par value (100 on our platform), borrowers are required to progressively increase their collateral over time.

To safeguard borrowers from the risk of liquidation, while also minimizing insolvency risks for our protocol, we mandate a minimum collateral requirement that varies based on the currency and the duration of the loan.

To secure user assets and protect the protocol from market exploitation, we introduce the minimum collateral base price (Base Price: BP). It will be used to calculate the required collateral for borrowers such that the input bond price is lower than the BP.

The BP is determined according to the following formula and pre-set reference base prices, categorized by the asset's yield range. It is an interpolated value with the corresponding duration of the bonds t: time to maturity, using two reference base prices, BP at Maturity and BP of 1y Duration.

Formulaic:

BP(t)=PMāˆ’t/(secondsPerYear)āˆ—(PMāˆ’P1Y)BP(t) = P_{M} - t/(secondsPerYear) * (P_{M} - P_{1Y})

BP (t)

Minimum collateral required base price

P_M

Reference Base Price at Maturity (0y Duration)

P_1Y

Reference Base Price of 1y Duration

t

Time to maturity in seconds

secondsPerYear

365 * 24 * 60 * 60

CategoryYield rangeBP at MaturityBP of 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

Example:

1) Category A, 0.25y Duration:

BP(0.25y)=96.00āˆ’0.25y/1yāˆ—(96.00āˆ’93.00)=95.25BP(0.25y) = 96.00 - 0.25y/1y * (96.00-93.00) = 95.25

2) Category C, 1.0 Duration:

BP(1y)=96.00āˆ’1y/1yāˆ—(96.00āˆ’89.00)=89.00BP(1y) = 96.00 - 1y/1y * (96.00-89.00) = 89.00

3) Category F, 1.5y Duration:

BP(1.5y)=96.00āˆ’1.5y/1yāˆ—(96.00āˆ’81.00)=73.50BP(1.5y) = 96.00 - 1.5y/1y * (96.00-81.00) = 73.50

In the examples above, we simplified the calculations by using annualized Duration. However, it's important to note that the actual calculations for our contract are based on seconds.

Setting Category

Category will be set depending on the APR of the currency.

Current Category

CurrencyCategory

BTC

A

ETH

B

FIL

F

USDC

B

We review the category in quarterly basis and revise if needed with community vote on the APR movement during the observing period.

Last updated