Protocol Overview

v1ta is a decentralized borrowing protocol that lets you mint VUSD stablecoin against SOL and LST collateral at just 110% collateralization ratio.

Core Principles

1. Decentralized

• No centralized control: Immutable smart contracts
• No governance: Parameters are fixed at deployment
• Crypto-only collateral: SOL and liquid staking tokens only
• No blacklists: Truly permissionless

2. Capital Efficient

• 110% minimum collateral ratio: Best-in-class capital efficiency
• Maximum borrowing power: Borrow up to about 90.9% of your collateral value
• No interest rates: Only pay a one-time 0.5% borrow fee

3. Stability Mechanisms

The protocol maintains VUSD at $1 USD through three mechanisms:

1. Redemptions: Burn VUSD for $1 worth of SOL
2. Stability Pool: Buffer against liquidations
3. Arbitrage: Market forces keep the peg

Protocol Components

CDP (Collateralized Debt Position)

A CDP is your position in the protocol. It consists of:

• Collateral: SOL (or LSTs) you've deposited
• Debt: VUSD you've borrowed
• Collateral Ratio: The health of your position

Collateral Ratio = (Collateral Value USD / Debt VUSD) × 100%

VUSD Stablecoin

VUSD is the protocol's stablecoin:

• Soft-pegged to $1 USD
• Backed by crypto collateral (SOL and LSTs)
• Redeemable: Always exchange for $1 worth of collateral
• Composable: Usable across Solana DeFi

Token Details:

• Decimals: 6
• Mintable only by opening or adjusting positions
• Burnable through repayment or redemptions

Stability Pool

The Stability Pool is the protocol's first line of defense against liquidations:

• Deposits: Users deposit VUSD
• Purpose: Repay liquidated debt
• Rewards: Earn SOL from liquidation penalties (4.5%)

When a position is liquidated:

1. Debt is paid by burning VUSD from the Stability Pool
2. Collateral is distributed pro-rata to depositors
3. 5% penalty: 0.5% to liquidator, 4.5% to pool

Redemptions

Redemption is the mechanism that keeps VUSD at $1:

How it works:

1. Burn X VUSD
2. Receive $X worth of SOL (minus 0.5% fee)
3. Collateral comes from CDPs with lowest CR

Why redemptions matter:

• VUSD trades below $1? Arbitragers buy cheap VUSD and redeem for $1
• This buying pressure brings VUSD back to $1
• Purely algorithmic, no intervention needed

Liquidations

When a position's CR falls below 110%:

• Anyone can liquidate the position
• Entire position is closed at once
• Liquidator reward: 0.5% of collateral value
• Stability Pool reward: 4.5% of collateral value

Liquidation Process:

1. Liquidator calls liquidate instruction
2. Position debt is repaid from Stability Pool
3. Position collateral goes to Stability Pool depositors
4. Liquidator receives 0.5% reward
5. Position is marked as liquidated

Oracle System

v1ta uses Pyth Network for real-time price feeds:

• Feed: SOL/USD
• Update Frequency: Sub-second
• Max Staleness: 60 seconds
• Precision: 8 decimals

Key Parameters

Protocol States

Global State

The protocol maintains global state tracking:

• Total collateral locked
• Total VUSD debt outstanding
• Total positions opened
• Stability Pool status

Position States

Each position can be in one of three states:

1. Active: Normal operating state
2. Closed: User has fully repaid and withdrawn
3. Liquidated: Position was liquidated due to low CR

Protocol Flow

Opening a Position

1. User deposits SOL collateral
2. Protocol calculates max borrowable amount
3. VUSD is minted (minus 0.5% fee)
4. Position is created and marked Active

Liquidation Flow

1. Bot or user detects CR < 110%
2. Calls liquidate with position address
3. Stability Pool VUSD burns to cover debt
4. Collateral transfers to pool depositors
5. Liquidator receives 0.5% reward

Redemption Flow

1. User burns X VUSD
2. Protocol finds CDPs with lowest CR
3. Extracts $X worth of SOL from those CDPs
4. Transfers SOL to user (minus 0.5% fee)
5. Reduces affected CDPs' debt proportionally

Security Features

No Governance Risk

• Immutable contracts: No upgrades or parameter changes
• No admin keys: No one can pause or modify the protocol
• Deterministic: Behavior is 100% predictable

Oracle Security

• Staleness checks: Reject prices older than 60 seconds
• Confidence intervals: Validate oracle confidence
• Fallback planned: Dual oracle system coming

Precision Handling

• SOL: 9 decimals (lamports)
• VUSD: 6 decimals
• Prices: 8 decimals (Pyth standard)
• Calculations: Proper scaling prevents overflow

Economic Security

• Liquidation incentives: 0.5% reward ensures bot profitability
• Stability Pool buffer: Prevents bad debt accumulation
• Redemption arbitrage: Keeps VUSD pegged algorithmically

Comparison with Other Protocols

Why 110% Works

The 110% minimum collateral ratio is sustainable because:

1. Fast liquidations: Solana's speed enables sub-second liquidation bots
2. Stability Pool buffer: Absorbs bad debt before it affects the protocol
3. Redemption mechanism: Creates continuous price pressure toward $1
4. Economic incentives: Liquidators profit from maintaining protocol health

Next Steps