Overview

A market type is a parametric template for a Covenant Market. It specifies the Neutral LTV, duration, price band, fees, and gates that together define how the market behaves under stress and at equilibrium. A single market type can be deployed against many Base Assets; for example, all major-crypto markets (BTC, ETH, MON) share the same 80/20 Wide template, while RWA-style yield-bearing collateral typically uses the 80/20 Concentrated template.

Four market types are currently in production. They span two design axes:

• Leverage / buffer split (80/20 vs 50/50). The senior / junior NAV split at Neutral LTV. 80/20 markets give 5x structural leverage to the junior tranche and an 8–10% loss buffer; 50/50 markets give 2x leverage and a 20% buffer.

• Price band width (Wide vs Concentrated). The AMM's operating range. Wide bands absorb base-asset price volatility but slip more on swaps; Concentrated bands concentrate liquidity around par for tight swaps but accommodate less collateral drawdown before stress gates engage.

Comparison

Market type	Neutral LTV	Structural leverage	Min / max price	Neutral rate	Min buffer	Best for
80/20 Wide	80%	5x	0.37 / 1.02	4%	8%	Volatile major crypto (BTC, ETH, MON, HYPE)
80/20 Concentrated	80%	5x	0.97 / 1.00	4%	10%	Yield-bearing low-volatility collateral (RWAs, stables, LST pairs)
50/50 Wide	50%	2x	0.80 / 1.07	4%	20%	Volatile collateral with conservative leverage / new assets
50/50 Concentrated	50%	2x	0.96 / 1.01	4%	20%	Moderately volatile collateral (LST/USD, equity indices, mezz credit)

All four types share the same duration (D = 3 month perpetual) and protocol fee (5% of funding yield). Swap fees differ: 5 bps for 80/20 markets (deep liquidity around par), 30 bps for 50/50 markets (compensates junior LPs for the lower-leverage book).

See the Glossary for definitions of each parameter.