Markets

A Market is one isolated lending market for one token. Lenders supply HYPE to it, borrowers open Lines against the token, and nothing is shared with any other Market.

Isolation

Each Market has its own:

• HYPE vault
• lenders and borrowers
• interest rate and utilization
• Abyss Reserve
• bad debt

If one token collapses and its Market is left with bad debt, only that Market's Abyss Reserve and that Market's lenders are affected. Lenders in other Markets carry no exposure to it. This is what lets Bythos accept long-tail tokens without making every lender underwrite all of them.

Creating a Market

Market creation is permissionless. Anyone can open a Market for a token by locking 100,000 $BYTHOS for 90 days. The lock is returned after the 90 days.

$BYTHOS is not launched. No contract address. On testnet, creators lock the mock token tBYTHOS instead, claimed from its faucet (1,000,000 tBYTHOS per address, once).

The MarketFactory contract handles creation with create(token, pool):

• It requires the 100,000 tBYTHOS lock for 90 days.
• It allows one Market per token.
• The pool must pair the token with WHYPE.
• It registers the pool with Sounding and records a first snapshot.

After 90 days, release(market) returns the lock to the creator. On mainnet, the factory additionally checks that the token's LP is locked in Horkos. Testnet does not check this.

The first 30 minutes

A new Market cannot be borrowed against for its first 30 minutes. The price cap uses the 30-minute TWAP, and twap(token, 1800) returns 0 until the Market's oldest stored snapshot is at least 30 minutes old. The factory records the first snapshot at creation, so borrowing opens 30 minutes after creation. See Anti-manipulation.

Parameters

Every Market uses the same parameters.

Parameter	Value
Borrow limit	70% of applied Depth Value of matured collateral
Liquidation threshold	85% of live value
Trawl penalty	5% of debt = 3% keeper / 2% protocol
Sounding window	15 min (minimum of recorded soundings)
Price cap	0.9 × TWAP30
Deposit age	50 blocks (about 5 s)
Slippage stop	15% below best bid
Record interval	at most once per 30 s
Rate curve	2% / 12% / 60% APR with 80% kink
Protocol share	10% of interest

Interest rates

Each Market has its own utilization curve. Utilization is borrowed HYPE divided by supplied HYPE.

Utilization	Borrow APR
0%	2.0% APR
80% (kink)	12.0% APR
100%	60.0% APR

The rate is linear between these points. Interest accrues per second.

Lenders earn the borrow rate, scaled by utilization, minus the 10% protocol share:

supply APR = borrow APR × utilization × 0.9

Utilization	Borrow APR	Supply APR
50%	8.25% APR	3.71% APR
80%	12.0% APR	8.64% APR
90%	36.0% APR	29.16% APR

The steep section above 80% pulls utilization back down: it makes borrowing expensive and supplying attractive, so idle HYPE returns for lenders who want to withdraw.

Supplying HYPE

Lenders supply native HYPE. Inside the Market it is wrapped to WHYPE, and the lender receives ERC-4626-style shares. Shares grow in value as borrowers pay interest.

Withdrawals are limited by idle HYPE in the Market: HYPE that is lent out cannot be withdrawn until borrowers repay or are trawled. At high utilization, a lender may have to wait.

If a Trawl leaves bad debt that the Abyss Reserve cannot cover, the remainder is written off across that Market's lenders only. See Abyss Reserve.

Where the protocol share goes

On testnet, half of the 10% interest share goes to the Market's Abyss Reserve and half to the Treasury. At mainnet, the protocol share is documented to go 50% to a TWAP buyback-and-burn of $BYTHOS and 50% as HYPE into the Abyss Reserve. See $BYTHOS.

Demo markets on testnet

Testnet has three demo Markets: DEEP, MID and THIN. They have the same supply (10,000,000 tokens each) and the same starting price, so the same market cap. Their pool depth differs 50:10:1: on the current testnet deployment the pools hold 0.1 HYPE against 500,000 DEEP, 0.02 HYPE against 100,000 MID and 0.002 HYPE against 10,000 THIN, a starting price of 0.0000002 HYPE for all three. Each Market starts with 0.03 HYPE supplied and 0.001 HYPE in its Abyss Reserve. The faucet gives 20,000 of each demo token per address, once. The same 20,000 tokens give a limit roughly 25× higher on DEEP than on THIN. On THIN, one faucet claim sold into the pool is enough to push a Line below 1.00; on MID it takes a little more than one claim; on DEEP it takes several. Try it in the app.