# Overview ### Overview Moveposition is a decentralized protocol for lending and borrowing powered by Concordia’s adaptive risk model #### A Universal Credit Hub: Secure, Efficient, and Transparent For DeFi users craving portfolio protection combined with capital-efficient growth, Moveposition emerges as a game-changer. Our platform bridges the gap with Concordia's adaptive risk layer, delivering unparalleled risk management and transparency. This translates to secure borrowing & lending, optimized leverage, and detailed reports - all empowering you to maximize returns and confidently navigate the DeFi landscape. **The Limitations of Static Risk Models in DeFi** Static risk models, currently prevalent in Decentralized Finance (DeFi), pose a significant and multifaceted threat to the ecosystem's financial and developmental stability. Akin to the models employed before the 1987 stock market crash, these static models are vulnerable to systemic failures. This vulnerability translates to substantial economic losses for users, ultimately hindering the overall stability and trust within the DeFi ecosystem. DeFi is susceptible to systemic risk, failing to capitalize on the learnings that traditional finance ("TradFi") gleaned over the past three decades. Furthermore, the inability of static models to adapt to the dynamic nature of DeFi significantly hinders the creation of novel, composable DeFi primitives. This directly impacts the potential for a modular defense strategy in the future, ultimately stifling the growth and mass adoption of DeFi by limiting its functionality and versatility. **Static risk models are a barrier to innovation, hindering DeFi's full potential to revolutionize financial landscapes.** **Billions of Dollars Lost:** Systemic failure threats from static risk models still linger in DeFi, threatening billions in user funds due to potential model shortcomings. **Prevents Innovation & Adoption:** They limit the creation of new, composable DeFi primitives, stifling growth and mass adoption by hindering the development of a truly versatile and user-friendly DeFi ecosystem. #### Moveposition taps into Concordia: A Hub for DeFi Innovation Fueled by Adaptive Risk Management. Concordia unlocks DeFi's potential by addressing core challenges and facilitating mass adoption. Developers can create groundbreaking applications through Concordia's modular Adaptive Risk Layer, leveraging dynamic, AI-powered risk management for composable innovation. This proactive approach enhances resilience against systemic risks, safeguarding users and fostering trust. # How It Works ### How It Works Superposition works as a decentralized credit platform. It connects lenders to borrowers, generating yield for the former and providing credit capital to the latter. **Economic Model** Each supported asset forms an independent lending pool. Lenders receive their pro rata share of the interest payments borrowers pay upon borrowing from these pools. Under this framework, the entire pool itself has a single interest rate, which all borrowers of that specific asset pay. **Floating Interest Rates** The interest rate for each instrument floats. It is a function of the utilization of the pool (ratio of borrowed capital to supplied capital), and changes immediately with each change to the utilization. **Perpetual Tenor** The loans have no fixed maturity and no repayment schedule. They are perpetual, with interest compounding continuously until the borrower repays the loan. **Collateral** Every borrower must maintain a minimum amount of equity in their portfolio. That is, the value of their collateralized assets must exceed the value of their debts by some specified margin. Superposition makes use of Concordia’s risk engine, which allows for cross-collateralization within a portfolio. All assets and all liabilities are considered together when setting the minimum equity for a portfolio. # Getting Started ### Install an Movement Wallet \ ### Dashboard #### Portfolio summary The portfolio summary section on the top shows important information about your account. Use this information to maintain a healthy portoflio. Let's go through each section from left to right. **Equity** represents the value of your portfolio, calculated as supplies - borrows (debt). In the health bar visualization, this is represented by the green part of the bar. This bar turns orange when your equity/debt ratio gets close to your minimum required equity limit. This bar turns red when your equity/debt ratio gets at, or below your minimum required equity limit. **Minimum Required Equity** is the minimum value of your equity balance before your account will be eligible for liquidation. This is a costly event and should be avoided by increasing your Equity/Debt ratio. This limit is calculated based on your portfolio's Value-at-Risk between equity and debt. [Learn more](https://docs.concordia.systems) about our risk model. **Debt** represents the total USD value of debt accumulated by borrowing. In the health bar visualization, this is represented by the blue length of the bar. **Health Factor** The health factor is the numeric representation of the safety of your supplied assets against the borrowed assets. It is calculated as equity / required equity. The higher the value is, the safer the state of your funds are against a liquidation scenario. If the health factor goes below 1, the liquidation of your deposits will be triggered. Keep this number high by supplying more collateral or repaying your borrow balance. If you would like to know more technical details about the health factor calculation, you can find those here. **What happens when my health factor is reduced?** Depending on the value fluctuation of your supplies and borrows, the health factor will increase or decrease. If your health factor increases, it will improve your borrow position by making the liquidation threshold more unlikely to be reached. In the case that the value of your collateralized assets against the borrowed assets decreases, the health factor is also reduced, causing the risk of liquidation to increase. # Lending ### Lending In Moveposition, lending is the act of moving an asset from a user's wallet into a shared pool of credit capital, out of which other users may borrow. The interest that borrowers pay is continuously compounded, and routed directly to the lenders as yield on their deposits. The lending operation produces a yield-bearing deposit note to the lender. This note is redeemable for a share of the lending pool. Moveposition streamlines the user experience by also collateralizing this yield-bearing note in the owner’s portfolio. The ability to pledge a note as collateral, and gain credit, Moveposition makes for an efficient borrowing system where lent capital can still be used to secure debts. The interest earned by the notes floats continuously. #### Yield The yield a lender receives from borrower interest accrues to their share. This yield is itself conditioned by the utilization of the broker. In a 100% utilized broker, all of the borrower interest payments translate to yield for the lenders. In a 50% utilized broker, only 50% of a lenders capital is actively accruing interest, and so the actual yield rate is 50% of the interest the borrowers pay. $$ Yield = Utilization \* APR $$ In the ordinary case, where a broker is not 100% utilized, borrowers will pay a higher interest rate than the yield acquired by lenders. This spread between rates is due to the <100% utilization of lent capital. #### Right of withdrawal A holder of a lending share can attempt redemption at any time. However, there is an outside possibility that the redemption may not be processed. If the broker is 100% utilized (meaning that all of the lent capital is loaned out), there is no liquidity available in the broker to return to the lender in exchange for redemption of the shares. In in this event, the lender must wait for borrowers to repay their debts before the lender can reclaim the capital. Brokers are hence encouraged to schedule high interest rates at high utilization in order to incentivize fast repayment of loans. # Borrowing ### Borrowing Portfolios that have pledged collateral receive a line of credit they may draw down to borrow any supported instrument on Moveposition. Note that a customer may use the protocol to borrow an investment instrument (such as APT), or a cash-equivalent (such as USDC). Borrowing cash is typically employed for leverage or taking tax-free income via loans; borrowing an investment vehicle is typically for the purpose of selling that borrowed instrument and shorting it. Loans are perpetual and have a floating rate. They do not have a fixed maturity date. Nor are their interest rates fixed. Under this paradigm, borrowers are never forced to repay their debts, so long as their portfolio still meets the minimum equity requirements set by the risk engine. Borrowers are incentivized to repay their loans only under two conditions: * The interest rate on their debt is not worth the opportunity of keeping the position open * They want to unlock collateral their collateral that is securing outstanding debt ### Leverage Moveposition allows for leverage by means of collateralizing borrowed capital. By borrowing and then collateralizing, the user can increase their exposures beyond the value of their initial capital. \ # Dynamic Margin & Risk Management #### Key Features of Moveposition's Dynamic Margin: At the core of Moveposition’s portfolio margining systems sits Concordia's risk engine, which is an FHS VaR (Filtered historical simulation value at risk model) based on the Bank of England's pioneering research in dynamic VaR models that pushes the boundaries of what's possible in this space. Below, we will explore just how it’s doing that. The Moveposition Dynamic Margin has two main risk components: 1. Market Risk (Powered By Concordia) * Data-driven dynamic margin for established tokens (traded for 90+ days) * Proxy dynamic margin for new tokens (traded for less than 90 days) {% hint style="info" %} Future Roadmap Implementations * Diversification Risk * Concentration Risk * Event Risk {% endhint %} 2. Protocol Risk Management * Liquidity Caps * Emergency Freeze * Rebalancing (Liquidations) {% hint style="info" %} Future Roadmap Considerations * Volume-Based Protocol Throttling {% endhint %} # Market Risk ### Market Risk We take a holistic and data-driven approach in determining your LTV ratio, rather than assigning one per each asset pair One of the critical benefits of Moveposition’s dynamic margin is its ability to respond quickly and accurately to market conditions. In a world where cryptocurrency prices fluctuate wildly from hour to hour, having a real-time model that can keep up with these changes is crucial for lenders looking to manage their risks effectively. **TLDR** Moveposition achieves dynamic margin by building on top of Concordia's real time market risk engine. Therefore: * Moveposition doesn't have a static LTV ratio assigned to each asset pair * Your portfolio will be assessed holistically to determine how much you can borrow for any particular asset * Correlation between the collateral and debt is always considered, i.e. **Moveposition is always in High Efficiency Mode (E-mode).** * Moveposition can react faster to systemic risk events, such as stable coin de-peg, over-concentrated collaterals, liquid staking asset price divergent...to name a few. **For Details** Visit to learn about how the Concordia Risk Engine supports the DeFi ecosystem to combat market risk and prevent systemic failure. # Liquidity Cap ### Liquidity Cap Moveposition is implementing a liquidity cap once it launches on Movement mainnet. Main considerations for such liquidity cap are: 1. To limit security and implementation risk of the Moveposition platform, and 2. To minimize systemic risk of the platform and the Movement ecosystem prior to full implementation of concentration charge, an additional factor controlling for maximum borrowing capacity in the Concordia risk engine based on market liquidity # Rebalancing (Liquidation) ### Rebalancing (Liquidation) **Basic Concept of Rebalancing** A portfolio may be forcefully rebalanced if it has insufficient equity. Rebalancing a portfolio involves taking over a portion of its debt and collateral, with the effect of increasing its health. A portfolio's health is a ratio of its total risk over its total collateral. To calculate total risk, the market value of its liabilities are summed and added to a quantity of risk. In this formulation, "risk" is just the required equity in a a portfolio -- that is, the value of collateral in excess of the value of liabilities. $$ HealthRatio = \frac {Liabilities + Risk} {Collateral} $$ HealthRatio=Liabilities+RiskCollateralHealthRatio = \frac {Liabilities + Risk} {Collateral} For a portfolio to be considered "healthy", its total collateral value must be greater than its liabilities added to the portfolio specific amount of risk. $$ Collateral \gt Liabilties + Risk $$ **Dynamic Close Rebalancing** The Concordia liquidation mechanism is one of the most vital components ensuring the protocol's health. Creating a successful liquidation mechanism must consider several primary concepts: 1. Preventing toxic debt 2. Ensuring adequately capitalized and decentralized liquidators 3. Other Design Factors. As a result, Concordia adopts a dynamic liquidation approach where an optimal amount of rebalancing is calculated and approved for liquidation based on the market conditions. More information about this dynamic liquidation approach can be found here: **Terms** * **Bounty:** Also referred to as Liquidation Fee or Liquidation Spread. The discount is offered on collateral to liquidators to repay parts of the loan. * **Close-Factor:** the maximum amount of debt that can be closed out and repaid in a single liquidation, eventually equal to 1 in the dynamic close outlined below. # Preventing Bad Debt One of the primary points of consideration is preventing toxic liquidity, defined as liquidations that lower the health factor of the portfolio instead of improving it. As highlighted by the Curve Attack on Aave, static incentives pushed the portfolio into a toxic liquidity spiral that, with each subsequent liquidation, deteriorated the health of the portfolio as opposed to improving it, creating lousy debt. The solutions laid out by the [Toxic Liquidation Spiral paper by Jakub Warmuz, Amit Chaudhary, and Daniele Pinna](https://arxiv.org/pdf/2212.07306.pdf#:~:text=In%20this%20paper%2C%20we%20argue,liquidation%20spiral%20on%20the%20platform.) are two-fold (note that this assumes a traditional DeFi liquidation order book queue where liquidations bid for discounts on unhealthy collateral to bring it back to healthy levels by repaying parts of the loan): 1. Dynamic incentives 2. Dynamic Closing factor **Dynamic Incentives:** Dynamic Incentives ensure that liqudations can’t: 1. Make the position more unhealthy 2. Make the position healthier than the initial margin (except for Health Ratio < 1) 3. Can’t be more than x% \* collateral discount {% hint style="info" %} x% is defined by asset risk classification (the riskier, the higher the discount) {% endhint %} The point of dynamic is incentives to liquidate the portfolio in a way that prevents toxic liquidity - recall from above, this is not bad debt but a liquidation that deteriorates the health factor of the portfolio, which then typically leads to bad debt - insolvency. This equation can be written as $$ (i) < (1/HealthRatio) -1 $$ Where (i) equals the collateral value of the loan amount repaid plus the premium of the liquidation incentive. As the Health Ratio approaches 1, the liquidation incentives diminish, which is by design, as there are still instances in which liquidation arb opportunities would exist to close this position, especially in volatile mean reverting markets. This equation can also be written as a non-negative number; see equation 7 in the [Toxic Liquidation Spiral paper](https://arxiv.org/pdf/2212.07306.pdf#:~:text=In%20this%20paper%2C%20we%20argue,liquidation%20spiral%20on%20the%20platform.). Additionally, the liquidation queue limits liquidators from making the position healthier than the initial margin. Combined with the above formula, this creates a band that liquidators must operate within, thus protecting the borrows from unethical liquidations. Lastly, there is a liquidation fee cap that does not allow fees to go beyond x% of collateral. This is set by asset risk classification, with riskier assets being assigned a higher % discount cap than risky assets. **Dynamic Closing Factor:** Under this model, the amount of the user's unhealthy portfolio available for liquidation increases as it gets closer to a Health Ratio of 1, rising to a point at which the entire collateral is offered to liquidators. Therefore, the dynamic closing factor further incentivizes liquidators in times of stress to compensate for the diminishing dynamic incentives as the portfolio gets closer to bad debt (see equation 8 in the [Toxic Liquidation Spiral paper](https://arxiv.org/pdf/2212.07306.pdf#:~:text=In%20this%20paper%2C%20we%20argue,liquidation%20spiral%20on%20the%20platform.)). In Corcodia’s case, the dynamic close can be set at a higher threshold, thereby closing out the entire portfolio before it reaches a Health Ratio of 1. This threshold is called the dynamic close, similar to margin sales in traditional capital markets. Note this threshold closeout variable is set by governance. In summary, the use of both the Dynamic Closing Factor and Dynamic Incentives together allows Concordia to increase incentives for liquidators by increasing the amount of collateral available for liquidation in line with the riskiness of the distressed portfolios' Health Ratio, thereby further de-risking the protocol linearly with the risk it carries. # Emergency Freeze ### Emergency Freeze An emergency freeze mechanism is a common safety measure among DeFi protocols to prevent cascading loan defaults. This mechanism can be triggered when many loans enter a critical zone of "toxic debt." This unhealthy zone is typically identified by a Health Factor dipping below 1. A Health Factor reflects the collateralization ratio of a loan (how much collateral is locked up compared to the borrowed amount). If the Health Factor of a large number of portfolios in the protocol falls below 1, it signifies insufficient collateral to cover the loan, putting the entire system at risk. In this case, an emergency freeze will be initiated, temporarily halting borrowing, lending, and potentially even asset transfers to prevent further deterioration and allow corrective actions. This safeguard helps maintain the stability of the DeFi protocol and protects lenders from widespread loan defaults. # Interest Rates ### Interest Rates Interest rates float and continuously compound. An asset's interest rate is a function of utilization. Interest rates increases along with utilization until the curve shifts again when the utilization hits an optimal point. Once hitting the optimal utilization threshold, the interest rates increase at a much higher speed to dis-incentivize borrowing to get back to optimal utilization. Since interest rates float with changing utilization, there are no guarantees that a loans interest rate will remain similar to its value at loan origination. Superposition attempts to strike a balance between predictable interest rates based on a range of acceptable utilization ratios, but may be incentivized to raise rates if high utilization creates a situation where lenders cannot withdraw their deposits. # Asset Pricing ### Asset Pricing Following the modular design principle, Moveposition does not directly handle and interact with pricing data. Instead, Moveposition leverages Concordia's Pricing Engine which feeds and provides the data foundation to derive the dynamic margin for each portfolio & borrowing scenario. In essence, Concordia’s pricing system provides real-time 1-minute granularity information on digital assets. It is designed to provide accurate spot prices with low latency, detect anomalous behavior in price movements, and gracefully smooth out corrupt or missing data. Details of Concordia's Pricing Engine can be found here: The Pricing Engine takes in a number of pricing oracles to mitigate single pricing source failure, including: # Supported Assets & Fees ### Supported Assets & Fees Borrowing on Moveposition is subject to the below fees: 1. Interest Rate Spread: the proceeds from Interest Rate Spread is used to support general operations of the protocol, including development of new products, maintenance costs...etc. This fee is accrued over the lifespan of the loan whenever there's a borrowing or lending action against the smart contract. 2. Stability Fee: Stability Fee is charged on top of the borrowing interest rate and is designated independently from the interest rate curve. It is accrued over the lifespan of the loan and the borrower will be liable to pay off the stability fee when the debt is repaid. The purpose of this fee is to ensure the stability of the Moveposition protocol by funding a pool of reserve assets to be deployed in case of long-tail market volatility. {% hint style="info" %} Typical borrow/lend protocols do not independently designate a stability fee, rather just charge various fees and have the governance body decide how much of the revenue is allocated to the risk reserve. By separating the Stability Fee from Interest Rate Curve, users of Moveposition do not pay “higher fees” when asset volatility increases, but simply contribute more towards the reserve fund. {% endhint %} 3. Rebalancing (Liquidation) Fee: visit [Rebalancing (Liquidation)](https://414471200-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FPf5n3M6l1r7Sj563q69J%2Fuploads%2FV2mcKU4UaHSJspXUA1mO%2Frebalancing%20liquidation?alt=media) for details and when the fee is applicable. Superposition uses dynamic liquidation factor, and the associated fees are as below: * 25% Rebalancing (liquidation): 7.5% fee * 50% Rebalancing: 5% fee * 75% Rebalancing: 2.5% fee * 100% Rebalancing: 2.5% fee Starting April 29th 2026, the below parameters and fees apply to the corresponding supported assets:
AssetOptimal Interest RateOptimal Utilization RateMax Interest RateInterest Rate SpreadStability Fee
USDCx10.15%90%200%15%0.15%
USDT.e7.65%90%200%15%0.15%
USDa5.15%90%200%15%0.15%
sUSDaN/A90%N/A15%0.15%
savUSDN/A90%N/A15%0.15%
wETH.e20.15%90%200%15%0.15%
ezETH20.15%90%200%15%0.15%
rsETH20.15%90%200%15%0.15%
weETH20.15%90%200%15%0.15%
wBTC.e20.15%90%200%15%0.15%