How Pyron Works
Pyron is a decentralized protocol for overcollateralized lending and borrowing, built specifically for the Fogo network. It allows users to supply supported assets to earn interest, or borrow assets by posting collateral. Every operation is executed on-chain, with no intermediaries or off-chain approvals. The system is governed by automated smart contracts and an embedded risk engine that continuously evaluates every user position in real-time.At a high level, here’s how Pyron operates:
1. Supplying Assets
Users can deposit any supported asset into Pyron. Once deposited, assets become part of a liquidity pool for that specific token. These pools are used to fulfill borrow requests from other users.Each asset has a weight, which determines how much of its value counts toward your borrowing capacity. The higher the weight, the more you can borrow against it. All deposits also accrue interest over time, paid by borrowers of the same asset.
2. Borrowing Against Collateral
To borrow from Pyron, users must first supply assets as collateral. The protocol requires overcollateralization, meaning the value of your supplied assets must exceed the value of what you borrow.The amount you can borrow depends on:
The total value of your supplied assets
The weights assigned to those assets
The current interest rates
Your Health Factor (which must remain above the liquidation threshold)
Interest accrues on borrowed assets continuously and compounds in real-time. There’s no fixed repayment schedule, users can repay at any time, as long as their account remains healthy.
3. Interest Rate Model
Each asset in Pyron uses a piecewise linear interest rate curve, which adjusts dynamically based on utilization:
Below optimal utilization: Low interest rates to encourage borrowing.
Above optimal utilization: Higher rates to discourage over-borrowing and ensure sufficient liquidity.
This model helps balance supply and demand while keeping lending yields attractive for depositors.
4. Health Factor & Liquidation
The Health Factor is a measure of how safe a user’s account is. It’s calculated using the weighted values of all supplied and borrowed assets. If your Health Factor drops too low, due to price volatility or increased borrowing, your position becomes eligible for liquidation. Liquidations are partial, meaning only enough collateral is sold to bring your account back to safety. The process is executed automatically by third-party liquidators, who are incentivized by fees.
5. Risk Engine & Asset Tiers
Pyron assigns each supported token to one of several risk tiers:
Collateral Tier: Can be supplied, borrowed, and used as collateral.
Borrow-only Tier: Can be borrowed, but not posted as collateral.
Isolated Tier: High-risk assets that must be borrowed alone, backed by safe collateral.
This classification allows the protocol to isolate risk without limiting access to diverse assets.
6. Oracles & Pricing
All collateral valuations and liquidation logic rely on real-time price feeds from oracles. Pyron uses a dual-oracle system with confidence-bound pricing and staleness protection. Pricing feeds are evaluated on-chain to prevent manipulation or stale data issues.
Summary
At its core, Pyron is a protocol that turns idle assets into productive capital and allows users to safely unlock liquidity. Lending and borrowing are governed by code, enforced by a risk-first engine, modular architecture, and composable DeFi logic built for Fogo’s performance layer
Last updated