Collateral Management
Inclusion Criteria
Genesis Vaults only accept high-quality, Solana-native collateral assets that meet strict standards for liquidity, price discovery, and smart contract safety. To be eligible, tokens must meet all of the following:- Oracle coverage via Pyth
- Major CEX listings, such as Binance, Coinbase, or ByBit
- Sufficient on-chain liquidity, with at least $1M in non-incentivized DEX volume
- Smart contract audits, with LSTs, LPs, and other wrapped assets requiring reviews by at least two Tier-One Solana security firms
A curated collateral list is maintained weekly and available upon request.
LTV Assignment
Loan-to-Value (LTV) ratios are calculated based on a risk assessment factoring in:- On-chain liquidity depth
- Historical and implied volatility
- Oracle latency and failure modes
- Standard tokens are analyzed for DEX slippage and liquidation capacity
- LSTs and LRTs are evaluated based on deviation from redemption value
- LP tokens inherit the risk profile of the most volatile or illiquid token in the pair, plus smart contract risk
- Paired assets (e.g., SOL/mSOL or USDC/USDT) may receive up to 95% LTV if both assets meet core security thresholds
Rate and Utilization Controls
Genesis Vault use a dynamic, manually-updated rate model to balance competitive yield generation with healthy liquidity reserves.Utilization-Based Yield Curve
Interest rates respond to the level of utilization within the Vault:| 0–25% utilization | 50% of the lowest available borrow rate on Solana |
| 25–50% utilization | Matches the prevailing floating rate |
| Above 50% | Rates step up toward the midpoint between market borrow and lend rates |
| SOL-based loans | Peg to Solana base inflation rate beyond 50% |
Collateral Diversification
To avoid overreliance on any single collateral type, there is a soft cap enforced on a collateral asset’s share of active loans. This cap is enforced via rate pricing mechanics. Once a collateral exceeds 10% of all active loans, interest rates increase to offset the added risk.| Collateral Group | Max Target Share | Rate Adjustment Above Cap |
|---|---|---|
| USDC / USDT | 50% | +2.5% per % |
| SOL + LSTs | 33% | +2.5% per % |
| JLP | 33% | +2.5% per % |
| Other assets | 10% | +2.5% per % |
Duration Premiums
Genesis Vaults initially support only short-term loans. When longer durations are enabled, they will carry additional interest premiums to offset reduced liquidity flexibility:- +10% of the base rate per week of duration
- Maximum exposure limits per term (see Term Caps)
Idle Capital
To enhance returns on unused capital, idle Vault funds may be temporarily deployed to other low-risk Solana protocols (e.g., MarginFi). These allocations are actively monitored and can be halted if risk parameters tighten.Liquidity and Withdrawal Safeguards
Loopscale employs multiple mechanisms to ensure vault liquidity is continuously available for depositor withdrawals and borrower repayments.Term Caps
Loan maturities are restricted to avoid concentration in long-dated risk:| Loan Term | Max % of Vault Debt |
|---|---|
| 1 day | 100% |
| 1 week | 50% |
| 1 month | 20% |
| 3 months | 10% |
Liquidity Thresholds
- 5% Liquidity Buffer: Lending is automatically paused when idle capital drops below 5% of total deposits.
- 1% Emergency Threshold: If idle capital falls below 1%, Vaults begin actively offloading loans to restore liquidity. Capital may be rebalanced through cross-strategy orderbook sales.
- Withdrawal Queue Protocol: When no additional liquidity can be sourced, a withdrawal queue is initiated. Lending originations pause until buffers are replenished.
Bad Debt Handling
Each Vault is isolated in terms of credit risk. If a loan defaults:- Liquidator receives full collateral value at oracle spot price
- The difference between loan principal and recovered value is deducted from the Vault’s NAV
- Losses are absorbed proportionally by depositors in that Vault
- Withdrawals are paused during resolution to prevent imbalance
Fee Structure
Genesis Vaults do not charge any fees until they surpass a $25M deposit threshold. Beyond that:- Performance fee: 10% of interest earned
- Fee flexibility: Fees are waived if Vault returns fall below competitive benchmarks
Operations and Infrastructure
Liquidations
Loopscale maintains a redundant liquidation system to ensure reliable, timely execution and protect against bad debt.Three-Tiered Liquidation System
-
Primary Service
- Cloud-based flash loan liquidator triggered by oracle updates
- Fully automated using Kamino, MarginFi, Solend, and major DEX routes
-
Secondary Poller
- Backup service polling every 5 minutes
- Uses a pre-funded manager wallet with controlled execution
-
Tertiary Manual Service
- Team-managed liquidation wallet with critical paging
- Manually executes liquidation if automated systems fail
Risk Monitoring & Alerts
Loopscale continuously monitors collateral risk, liquidation performance, and infrastructure liveness.- Real-time dashboards: Collateral exposure, oracle performance, withdrawal trends, and rollover timing
- Alerts: Slack, SMS, and PagerDuty notifications for:
- Oracle staleness
- Withdrawal spikes
- Failed liquidations
- Solana chain congestion or liveness issues
Operational Security
Loopscale operates all smart contracts and backend services under strict access control.- 3/5 multisig governance for contract upgrades (via Squads)
- Granular IAM roles and 2FA on backend services
- Immutable logic on liquidation and refinance flows
- Dedicated disaster response internal SOP and 24/7 on-call rotation