Markets, Rates, and Parameters
Forge is organized into separate markets. Each market has its own asset, rates, caps, oracle price, and risk settings.
This page explains the terms users see in the app and how Forge parameters work.
Markets
A market is one supported asset inside the Forge lending pool.
| Market | User role | Borrowable? | Collateral? |
|---|---|---|---|
| TAO market | TAO supply / borrow market | Yes | No |
| Alpha token market | Alpha collateral market (one per listed subnet) | No | Yes |
The user-facing model is simply:
Alpha collateral → TAO borrow
TAO supply → borrower interest
Specific Alpha markets are chosen at the listing process based on subnet volume, liquidity, and safety criteria.
vTokens
When a user supplies an asset, Forge mints a vToken that represents that supplied position. In simple terms, this is the receipt token for the position.
The vToken balance is not the same as the underlying asset balance. It is a receipt for the supplied position. Over time, the exchange rate between the vToken and the underlying asset changes as interest accrues.
Do not transfer vTokens away from a wallet with an active borrow position unless you understand the effect on account health.
vTokens can be part of the collateral backing a loan. Moving them can reduce borrowing power and may put the account at risk of liquidation.
Exchange rate
The exchange rate converts vTokens back into the underlying asset.
For suppliers, this is how lending interest is reflected. Instead of receiving a separate payment every block, the value of the supplied position grows through the vToken exchange rate as borrowers pay interest.
In plain language:
underlying value = vToken balance × exchange rate
The Forge app shows the user's underlying value, not just the raw vToken balance.
Utilization and interest rates
Forge uses variable interest rates. The key input is utilization, which means how much of the supplied TAO in the market is currently borrowed:
utilization = borrowed TAO / total supplied TAO
Available TAO liquidity is the unborrowed remainder that users can still withdraw or borrow. It is useful for understanding how much cash is left in the pool, but it is not the denominator for the utilization percentage shown in the app.
When utilization is low, borrow rates are usually lower because there is plenty of liquidity available. When utilization is high, borrow rates rise because the pool has less idle liquidity and suppliers need stronger compensation.
This affects both sides:
- Borrowers pay the borrow rate on open TAO debt.
- Suppliers receive root yield as the base rate and can earn additional borrower-paid interest when utilization rises.
The TAO market uses a curve with three zones. Rates rise slowly when there is plenty of liquidity, rise faster as the market gets busier, and rise sharply when most TAO liquidity is borrowed. This helps keep borrowing predictable in normal conditions and encourages repayment or new supply when liquidity gets tight.
The chart above is illustrative. The current TAO rate parameters are visible in the app.
Each Forge market can carry its own interest-rate parameters. Alpha collateral markets are collateral-only, so their interest-rate parameters do not drive an active borrow rate.
Reserve factor
The reserve factor is the protocol fee on borrower interest. The current testnet TAO market reserve factor is 0%; planned mainnet economics target 20%.
In plain language, when borrowers pay interest, 20% of that interest is kept by the protocol as reserves and 80% goes toward the borrower-interest part of supplier yield, before other market effects are accounted for.
borrower-interest yield = borrower interest × utilization × (1 - reserve factor)
Performance fee
The performance fee applies to Alpha collateral yield, not borrower interest. The planned mainnet economics set this fee at 25% of Alpha collateral emissions, with the remaining 75% passing through to borrowers.
The current testnet deployment is different: wrapper fee settings are 0%, so no Alpha collateral yield is currently retained as a protocol performance fee on testnet.
Collateral factor and liquidation threshold
Forge uses two separate risk parameters:
- Collateral factor controls how much a user can borrow.
- Liquidation threshold controls when the account can be liquidated.
The liquidation threshold is set higher than the collateral factor, so an account that just opened a max-sized borrow is not immediately liquidatable on a small adverse price move.
Market parameters
Live values are always available in the Forge app. The examples below show how the parameters are presented, but the app is the source of truth before users open or manage a position. Today, these parameters start with Forge Guardian Multisig configuration as an initial safety control and can be adjusted afterward. That is not the end-state positioning: Forge is designed to move toward risk parameters informed by competition between independent Endure analysts as the network reaches enough confidence.
Example per-market risk parameters
| Market | Collateral factor | Liquidation threshold | Borrowing |
|---|---|---|---|
| TAO market | N/A (borrow market) | N/A | Enabled |
| Alpha token market | 25% | 35% | Disabled |
Example global protocol parameters
| Parameter | Value | What it means |
|---|---|---|
| Liquidation incentive | 8% | Bonus paid for liquidating an unhealthy account. |
| Reserve factor (TAO market) | 0% current testnet / 20% planned mainnet | Protocol fee on borrower interest. |
| Performance fee | 25% planned mainnet / 0% current testnet | Fee on Alpha collateral yield; testnet is currently configured with no performance fee. |
Alpha collateral factor and liquidation threshold values can differ by listed subnet.
Supply caps and borrow caps
Caps limit how much risk a market can create.
- A supply cap limits how much of an asset can be supplied.
- A borrow cap limits how much of an asset can be borrowed.
Forge's Alpha markets are collateral-only. Borrowing Alpha is disabled, which means Alpha tokens can back a TAO loan but cannot be borrowed from Forge.
Account health
The app helps users watch account health before they borrow, withdraw, or wait through market volatility. Important values include:
- supplied collateral value.
- outstanding TAO debt including interest.
- current borrow limit.
- liquidation threshold.
- remaining borrow power.
- whether any market action is paused or capped.
Borrowers should avoid using the full borrow limit. A buffer gives the account room for Alpha price moves, interest accrual, oracle updates, and liquidity changes.
Parameter changes
Forge parameters are not static. Early parameter changes, pauses, and emergency actions are controlled by the Forge Guardian Multisig as a safety and operations layer. Over time, the goal is for Endure's competitive risk-intelligence network to inform those parameter decisions instead of relying on committee judgment alone.
Forge's economic loop is designed to reinforce that transition: more than 50% of protocol revenue is intended to be directed toward Alpha buybacks, deepening alignment between Forge usage, protocol-owned Alpha exposure, and the risk network that supports parameter intelligence.
Parameters that may change include:
- collateral factors.
- liquidation thresholds.
- liquidation incentives.
- supply caps.
- borrow caps.
- reserve factors.
- performance fee.
- interest-rate model settings.
- oracle configuration.
- pause settings for market actions.
Users should treat these settings as part of the risk surface. The Forge app shows current parameters clearly and surfaces changes before users take new positions. See Collateral and Risk for the full risk surface.