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Supplying and Borrowing

Forge works like a pooled money market. Suppliers add liquidity to a market. Borrowers add collateral, borrow against it, and pay interest until the debt is repaid.

The Forge-specific detail is the asset pair: the borrow side is TAO, while the collateral side is Bittensor subnet Alpha exposure.

Supply TAO

TAO suppliers provide the liquidity that borrowers draw from. In return, they receive a receipt token representing their share of the supplied pool.

Supplier yield has two parts: root yield as the base rate, plus additional borrower-paid interest when the market is being used. As yield accrues, the supplier's position increases in value through the market exchange rate, subject to utilization, protocol solvency, market risk, and smart-contract risk.

Supplying TAO is useful for users who want lending yield without taking a direct borrow position.

Supply Alpha collateral

Borrowers supply Alpha-backed collateral into a supported Alpha market. Each Alpha market is tied to a specific Bittensor configuration, including subnet identity and validator/hotkey exposure. The current testnet active markets use subnet-specific wrapper tokens and V3 collateral position tokens such as wAlpha288V3 / vWAlpha288V3.

Forge's Alpha collateral path uses Bittensor's staking precompile approve and transferStakeFrom (opentensor/subtensor PR #2478). The user approves the wAlpha wrapper to move Alpha stake, then the wrapper pulls the approved stake into the contract's mapped coldkey. The corresponding vWAlpha market represents the user's supplied collateral position.

Once Alpha collateral is supplied, the user can enter that market as collateral and receive borrowing power.

Alpha collateral keeps earning its native yield while it is supplied. Planned mainnet economics retain a 25% performance fee from Alpha collateral emissions and pass 75% through to borrowers. On the current testnet deployment, the wrapper performance fee is set to 0%, so no Alpha collateral yield is currently retained as a protocol performance fee on testnet.

In Forge, supplying an asset and using it as collateral are related but separate concepts. A user may need to enable or enter a market before the supplied position counts toward borrowing power. This lets the protocol know which supplied assets should secure the user's debt.

Borrow TAO

Borrowing power depends on the collateral value and the risk parameters configured for the Alpha market. Forge checks the account before allowing a borrow. If the requested borrow would make the account too risky, the transaction is blocked.

In plain language:

available borrow = collateral value × collateral factor - existing debt

Specific collateral factors are per-market and visible in the app. See Markets, Rates, and Parameters for current values.

Alpha itself is not borrowable. The core user flow is Alpha collateral → TAO borrow.

Repay TAO

Borrowers repay TAO to reduce their debt. Repayment improves account health and can make more collateral withdrawable.

Interest accrues while the borrow is open. The longer the borrow remains open, and the higher utilization is, the more the borrower owes. Forge uses a variable interest-rate curve for the TAO market. See Markets, Rates, and Parameters.

Borrowers can usually repay part of the debt or the full debt. A full repayment is the cleanest way to close borrowing risk before withdrawing collateral.

Withdraw collateral

Users can withdraw collateral only when the account remains healthy after the withdrawal. If withdrawing Alpha would leave too little collateral supporting the TAO debt, Forge blocks the action.

This rule protects suppliers. It ensures borrowers cannot remove the collateral that backs outstanding TAO loans.

If a withdrawal fails, the common reasons are that the account would become unhealthy, the market is paused, a cap or oracle check blocks the action, or the wallet is trying to withdraw collateral that still backs active debt.

What to watch as a borrower

Borrowers should monitor:

  • borrow balance: how much TAO is owed, including interest.
  • collateral value: how the Alpha position is priced.
  • borrow limit: the maximum debt allowed by collateral factors.
  • liquidation threshold: the point where liquidators can repay debt and seize collateral.
  • Alpha liquidity and staking rules: because Alpha exit can involve Bittensor-specific minimums, rate limits, and price protection.

The safest borrower behavior is to borrow below the maximum and keep a buffer for price moves, oracle updates, and liquidity changes.

Common transaction checklist

Before confirming a transaction, users should check:

  • the wallet is on the correct Bittensor EVM network.
  • the market is the intended TAO or Alpha market.
  • the app shows the current collateral factor, liquidation threshold, and borrow rate.
  • there is enough native gas token for the transaction.
  • the position remains healthy after the action.
  • the user understands whether they are supplying, enabling collateral, borrowing, repaying, or withdrawing.

This is especially important for Alpha collateral because Forge handles native Bittensor staking rules, not only standard ERC20 transfers.