# Peapods Overview https\://peapods.finance
### What is Peapods Finance? Peapods Finance is a permissionless, modular decentralized finance (DeFi) protocol that allows any ERC-20 asset to become the foundation of a self-sustaining financial system. The protocol enables the creation of Vaults called “Pods” which provide depositors with a synthetic ERC-20 wrapped version of the deposited asset (pTKN). Pods unlock yield opportunities through internal protocol mechanics such as Volatility Farming, Leveraged Volatility Farming (LVF), Lending Markets, Metavaults and Governance. These primitives work together to generate organic yield from volatility and market activity, without relying on inflationary emissions. Peapods enables seamless on-chain deployment of advanced financial tooling with no permissions required. Protocols and communities can bootstrap liquidity and launch leveraged yield strategies through a fully composable and immutable infrastructure with absolutely no upfront costs. ### **Why Peapods Exists** Incentive models across most of DeFi rely on emissions through newly minted tokens which are distributed as rewards. These emissions dilute supply and inevitably decay in effectiveness, whilst devaluing the exact asset they are designed to support. Peapods has been built to eliminate dependence on these models and move DeFi towards a more sustainable incentive model. By treating volatility as a yield source, Peapods enables real, sustainable incentives. The protocol captures fees from wrapping/unwrapping assets, trading activity, and borrowing behavior. These fees are recycled back into the system, creating a compounding flywheel for protocol growth that does not require new token issuance.
# What does Peapods do? Peapods provides users with the tools required to farm volatility and earn yield on any liquid asset. With Peapods, users can wrap any one or more liquid assets into a single ERC-20 token. These wrapped tokens are referred to within the Peapods ecosystem as "Pods". Pod tokens (pTKN) are always fully backed by the original assets (TKN), and can be unwrapped for these assets at any time. This means that Pods will always have a market value that aligns to the underlying assets.\ \ Arbitrage opportunities occur whenever the price of TKN and pTKN deviates beyond the cost to (un)wrap. This arbitrage volume drives revenue through the protocol via the (un)wrap fees, and this revenue is used to benefit pTKN holders, LPs and PEAS holders.

The above shows the route taken by arbitrageurs dependent on whether the Pod (pTKN) is over-valued or under-valued vs the underlying asset(s) (TKN).

# Core Principles ### **Core Principles** **Sustainability**\ Peapods does not rely on emissions or inflationary mechanics. Yield comes exclusively from on-chain economic activity and is recycled back to participants. **Transparency**\ All actions, fee flows, governance decisions, interest rate changes are recorded and visible on-chain. There are no admin keys, upgradable contracts, or hidden privileges. \*\ \*Excluding during live beta phases **Accessibility**\ Anyone can turn any ERC-20 token can be turned into a yield-generating Pod via a no-code interface. There is no need for external approvals, governance votes, or technical integration. **Immutability**\ Core contracts are non-upgradable and cannot be paused or changed once deployed. This ensures long-term consistency and eliminates centralized failure risks. \*\ \*Excluding during live beta phases **Aligned Incentives**\ Peapods separates protocol participants into discrete roles such as traders, liquidity providers, lenders, borrowers, and governance participants. Each roles earns value from the protocol in a different way. # Core Concepts Peapods Finance is built upon a modular suite of DeFi primitives that collectively enable any ERC-20 token to serve as the base layer for yield generation, liquidity provisioning, and governance. These components operate permissionlessly, without emissions, and without the need for centralized intermediaries. Each module can be used independently or in combination to create self-sustaining financial ecosystems around any asset. ### **Core Components** **Pods**\ Smart vaults that wrap base tokens (TKN) into synthetic tokens (pTKN). These synthetic tokens become composable, yield-bearing derivatives of their underlying asset. **Volatility Farming (VF)**\ A mechanism that rewards liquidity providers with real yield based on protocol fees with no emissions. Yield increases with volatility and liquidity depth. **Leveraged Volatility Farming (LVF)**\ A soft-leverage system that enables users create full-range liquidity positions by depositing only the pTKN side of the LP pair. Users borrow the paired asset to open amplified LP positions, increasing yield and retaining full exposure to their chosen asset. **Self-Lending & Proof of Demand (PoD)**\ A mechanism enabling users to bootstrap lending markets by borrowing from themselves in a flashloan-style loop, initializing utilization and demand without requiring outside liquidity. **Metavaults:**\ Governance-directed smart vaults that aggregate lender deposits and automatically allocate liquidity across whitelisted Pods, based on protocol-defined strategies. **vlPEAS Governance**\ Governance structure based on vlPEAS which allows users to vote to direct liquidity flow, approve Pod whitelisting, and earn protocol revenue. **Protocol Flywheel**\ A compounding feedback loop where usage generates fees, which increase LP rewards and vlPEAS revenue, leading to further adoption and deeper liquidity. Each module is fully composable with one another, enabling projects to tailor strategies and capital flows to their unique community needs or market conditions. The following sections explore each of these primitives in greater detail.
# PEAS Tokenomics ## Token Contract [0x02f92800F57BCD74066F5709F1Daa1A4302Df875](https://etherscan.io/token/0x02f92800F57BCD74066F5709F1Daa1A4302Df875) ## Initial Supply 10,000,000 PEAS ## Launch Distribution | Tokens | Location | | ----------------------------------------------------------------------- | ------------------------------------------------------------------------ | | [44% (4,400,000)](https://app.uniswap.org/positions/v3/ethereum/623058) | Uniswap 1% V3 PEAS/DAI position, $100k-$300k market cap concentration | | [44% (4,400,000)](https://app.uniswap.org/positions/v3/ethereum/623059) | Uniswap 1% V3 PEAS/DAI position, $100k-infinity market cap concentration | | 12% (1,200,000) | Team, distributed 6 ways fully vested | | *Total: 100% (10,000,000)* | | # vlPEAS (Governance) Coming Soon Peapods governance is powered by vlPEAS, a value-accruing wrapped form of the native $PEAS token. Users acquire vlPEAS by wrapping PEAS, granting them direct voting rights over protocol strategy, Metavault capital allocation, and Treasury deployment. Unlike traditional vote-escrow models, vlPEAS requires no fixed lockup period, and voting weight is determined solely by the amount of vlPEAS held. This structure enables flexible yet aligned governance participation while maintaining protocol decentralization. ### **vlPEAS holders control:** **Metavault Allocations**:\ Electing which Pods receive liquidity and defining per-Pod allocation caps to manage systemic risk. **Treasury Management**:\ Deciding how vlPEAS-controlled capital is allocated—including yield strategies, buybacks, and insurance reserves. Governance actions are fully executed on-chain and are binding across all protocol modules. However, to preserve protocol safety, Peapods retains a veto right. This veto right may only be instated in instances where the team of Peapods Finance deems a vote outcome to be malicious, reckless, or harmful to protocol integrity. In these edge case scenarios, execution may be delayed or overridden. # Protocol Revenue ## Revenue Share Overview The Peapods protocol generates revenue through LVF-related activity, with fees collected directly from market usage: | Revenue Source | Share Captured by Protocol | | ------------------ | ----------------------------------- | | Borrowing Interest | 10% of all interest paid | | LP Yield Accrual | 10% of all auto-compounded LP yield | | LVF Open Fee | 1% of all borrowed Paired Asset | | LVF Close Fee | 1% of pTKN returned to user | | Liquidation Bonus | 10% of all liquidation proceeds | Fees are collected in various assets and may be converted to an agreed upon asset(s) prior to being distributed to their respective destinations. # vlPEAS Treasury 60% of all LVF-related Protocol revenue and is allocated to the vlPEAS Treasury, which is owned and governed by vlPEAS holders. The remaining 40% is directed toward protocol operations, infrastructure costs, and growth initiatives. ### **Treasury Mandates** The vlPEAS Treasury is governed by three core requirements, ensuring consistent capital alignment and protection: | Mandated Allocation | Requirement | | --------------------- | ---------------------------------------------------------------- | | **Buy & Burn $PEAS** | ≥5% of total protocol revenue | | **Buy & Burn vlPEAS** | Up to 55% of revenue (governance-adjustable) | | **Insurance Reserve** | Maintain ≥$200,000 as a reimbursable pool for Metavault bad debt |
If the Insurance Reserve ever falls below $200,000 then a minimum of 10% of all incoming revenue is redirected to refill it until the threshold is restored. Governance may vote to increase these thresholds, but they can never be lowered below $200,000 or 10% respectively. The insurance fund is to be used to mitigate scenarios upon which bad debt is incurred by a Metavault up to the total available balance of the fund, as deemed appropriate by vlPEAS votes and/or the Peapods Finance core team. This structure ensures: * vlPEAS appreciates over time through supply reduction * Treasury capital is used defensively to protect depositors * Governance maintains flexibility while respecting core safeguards *** The vlPEAS governance and Treasury system transforms protocol participation into an aligned, value-generating flywheel through: * **No lockups,** governance weight is live and proportional to vlPEAS held * **Revenue-backed yield**, derived from real usage-based protocol revenue * **Mandatory capital flows** to buybacks, burns, and safety reserves * **Full on-chain control** by vlPEAS holders over Metavaults and vlPEAS Treasury decisions Through this structure, vlPEAS holders become both governors and beneficiaries over various aspects of the Peapods Protocol. # Revenue Share
Revenue allocated to buy and burn vlPEAS functions as a backing-based yield mechanism, similar to how Pod tokens (pTKN) accrue value. When vlPEAS is burned, it reduces the supply of outstanding vlPEAS while leaving the underlying PEAS untouched. As a result, each remaining vlPEAS represents a larger share of the underlying PEAS tokens. This process increases the claimable PEAS backing per vlPEAS, providing holders with non-emissive, protocol-native yield in the form of value accrual. This structure has several key properties: **Backed Yield**:\ vlPEAS holders earn PEAS-denominated yield as the collateral backing ratio (PEAS per vlPEAS) increases with every vlPEAS burn. **Non-Dilutive**:\ No new vlPEAS or PEAS are minted as the yield is derived purely from treasury growth and vlPEAS supply reduction. **Governance Aligned**:\ Since vlPEAS represents both voting power and yield from Treasury-assigned revenue, its value increases in tandem with protocol usage. The percentage of revenue allocated to these burns is governance-controlled, allowing vlPEAS holders to balance direct yield accrual with other strategic deployments. This system transforms vlPEAS into a PEAS-yielding governance token, where participation is rewarded through growing backing as opposed to the inflation model that is common amongst governance tokens. # Pods Pods are the foundational primitive of the Peapods protocol. Each Pod accepts deposits of a base ERC-20 token (TKN) and mints a synthetic representation known as pTKN. pTKN is fully composable and can be used across multiple functions within and beyond the Peapods ecosystem: * Paired in LPs for Volatility Farming * Borrowed against via Leveraged Volatility Farming (LVF) * Held passively to accrue value from protocol revenue * Used in any external DeFi application that supports ERC-20 assets This flexibility makes pTKN both a yield-bearing asset and a modular building block for advanced strategies. # Pod Fees Each Pod is configured with the following fee types: | Fee Type | Description | | ----------------------- | -------------------------------------------------------------------- | | Wrap Fee (e.g., 0.25%) | Charged when converting TKN → pTKN | | Unwrap Fee (e.g., 0.5%) | Charged when converting pTKN → TKN | | Cooldown (Optional) | Users may bypass unwrap fees by waiting a predefined cooldown period | | AMM Buy Fee | Paid when purchasing pTKN in the paired LP | | AMM Sell Fee | Paid when selling pTKN into the paired LP | All fees are routed based on a Pod-specific revenue split between LP Rewards, Partner Share and pTKN Burns. # Collateral Backing Ratio (CBR) ### **Collateral Backing Ratio (CBR)** Each Pod maintains a **Collateral Backing Ratio (CBR)**, which defines the amount of TKN backing each pTKN: > **CBR = TKN Balance / pTKN Supply** As Pods generate revenue through wrapping, unwrapping, trading activity, and arbitrage flows, a portion of this revenue is used to burn pTKN supply. Since the underlying TKN balance remains intact, this causes the CBR to increase over time and enables each pTKN to redeem a larger share of TKN.
**Example:** * TKN held in Pod: **1,200** * pTKN in circulation: **1,000** * Resulting CBR: **1.2** Each pTKN is redeemable for 1.2 TKN (less applicable fees). Likewise, wrapping 1.2 TKN would mint 1 pTKN.
> *CBR increases irreversibly and does not decline. This makes pTKN a value-accruing asset that grows in redemption value over time.* # Arbitrage Arbitrage is the act of profiting from price discrepancies across markets. Within the Peapods system, these opportunities arise when the market price of pTKN diverges from its redemption value, which is determined by the Collateral Backing Ratio (CBR). Because pTKN is actively traded in AMM pools, its price can move independently of the amount of TKN it is redeemable for. This creates arbitrage loops that feed value back into the system. ### **Arbitrage Routes** **If pTKN is trading below its redemption value:** 1. Arbitrageurs buy discounted pTKN from the AMM pool. 2. They unwrap pTKN to receive more TKN, based on the current CBR. 3. TKN is sold externally at market price, generating a profit. **If pTKN is trading above its redemption value:** 1. Abitrageurs buy discounted TKN from the market. 2. They wrap TKN into pTKN, based on the current CBR. 3. They sell the newly minted pTKN into the AMM at the inflated price, generating a profit.
Each arbitrage event delivers three key outcomes: **Pod Revenue**:\ Buy, Sell, Wrap and unwrap fees are captured and allocated to the Pod. The rate of fees and distribution mechanics are specific to the settings of each Pod. **CBR Growth**:\ If a portion of Pod revenue is allocation to pTKN burns, then the CBR of the Pod will increase thus increasing the value of each pTKN relative to TKN. **Price Stability**:\ Arbitrage pressure pulls the AMM price of pTKN back toward its redemption value, improving capital efficiency and liquidity reliability. Arbitrage is therefore not only self-correcting—it is value-generating. It ensures that price dislocations benefit both LPs and pTKN holders, while continuously reinforcing the underlying economic loop of the Pod. # Indicative Pod Settings Configuration can vary depending on asset characteristics and typical price action. Below are some indicative settings based on the daily volatility of the underlying asset of a Pod. | Volatility Category | Wrap/Unwrap Fee | Buy/Sell Fee | | ---------------------- | --------------- | ------------ | | Low Volatility (<5%) | 0.2% / 0.3% | <1% each | | Mid Volatility (5–10%) | 0.5% / 1% | 1–2% each | | High Volatility (10%+) | 1% / 1.5% | 2.5% each | The recommendation for pTKN Burn varies depending on the intention of the Pod. A lower pTKN burn will see a greater portion of Pod revenue being supplied solely to liquidity providers, whilst a higher burn ensures a larger portion of yield for passive pTKN holders.\ \ If the goal is to incentivize a “staking” style model then a higher pTKN burn is the favorable option, or if the aim is to encourage liquidity depth then a lower pTKN burn should be applied.\ \ \&#xNAN;*Note: The greater the volume and liquidity depth of both the TKN and pTKN pools, the greater the potential performance of the Pod.* # Volatility Farming Volatility Farming (VF) is a core yield-generation mechanism within the Peapods protocol, designed to monetize volatility. It enables liquidity providers (LPs) to earn yield from real economic activity, rather than relying on token emissions or inflationary incentives. The protocol captures arbitrage flows, trading activity, and pTKN interactions to provide sustainable returns for LPs. By embedding fee mechanics directly into the Pod lifecycle (e.g., wrapping, unwrapping, trading), Peapods ensures that every interaction with the Pod, routes value back to LPs. This creates an organic, non-inflationary incentive loop where Pod activity directly powers LP yield. Volatility Farming transforms liquidity provision into a strategy that benefits from price volatility, rewarding participants for enabling deep, arbitrageable markets. # Yield Source LPs who provide liquidity to a pTKN/Paired Asset pool (e.g., pOHM/ETH) earn yield from protocol fees triggered by:\ Wrap and unwrap actions\ Arbitrage between TKN and pTKN markets\ Continuous spot trading volume within the Pod’s LP These interactions generate wrap fees, AMM buy/sell fees and >unwrap fees. Most of the fees are retained in the Pod, either directly (via auto-compounding LP Rewards) or indirectly (through CBR increases and pTKN burns).\
The AMM structure follows a standard x\*y=k invariant with full-range liquidity. This ensures pricing is always available and arbitrage remains frictionless, allowing value to be extracted consistently by LPs across market regimes.\ \ Unlike traditional liquidity sourcing schemes such as liquidity mining, where yield decreases as TVL scales, VF yield remains actually improves as TVL scales. This is because VF does not rely on diluting the token supply or short-term mercenary capital. Instead yield scales with protocol usage whilst LPs retain exposure to upside of CBR increases.
This structure avoids capital flight, incentivizes active market participation, and creates an enduring value base that aligns liquidity with demand rather than emissions. All parties benefit from markets scaling and maturing, which is a notable distinction when comparing to traditional yield farming models. # Amplified Volatility Choosing the correct pairing asset for a Pod can amplify the potential voaltility, and thus performance of a Pod. The more volatile the pTKN/Paired Asset pair, the greater the likelihood of:\ Price divergence from fair value (based on external market benchmarks)\ Arbitrage-driven interactions\ Fee generation from correcting these imbalances Protocols can optimize this effect by selecting counter-correlated or uncorrelated assets as pairings. For example, pairing a high-volatility DeFi token with ETH or a stablecoin amplifies price dislocations and creates recurring arbitrage windows. This impact can then be further amplified by pairing with an asset that is counter-correlated or negatively correlated with the core LP position of TKN, resulting in arbitrage not just between pTKN/TKN but also in divergences between the prices of the two paired assets. Yield is therefore a direct function of volatility, volume, and fee structure. LP returns increase linearly with system usage but can scale disproportionately during high-volatility environments. # Leveraged Volatility Farming (LVF) Leveraged Volatility Farming (LVF) is a capital-efficient yield amplification strategy that allows users to access enhanced LP rewards without supplying both sides of a trading pair. Users deposit pTKN, borrow the paired asset (e.g., ETH or USDC), and create a liquidity position in a pTKN/Paired Asset pool. This forms a synthetic leveraged LP position where the collateral and borrowed asset co-exist within a single unified structure. LVF uniquely enables users to obtain leveraged exposure to volatility farming rewards using a self-collateralizing position, without relying on external leverage, overcollateralization models, or emissions.
LVF provides numerous benefits to borrowers, including:\ · Access enhanced LP rewards with only one-sided exposure, no need to supply both assets · Avoid selling the underlying asset thus ensuring full exposure to pTKN is retained · Participate in high-yield liquidity provisioning with amplified exposure to VF rewards · Contribute to Pod depth and arbitrage frequency, increasing long-term pTKN value # Position Lifecycle and Internal Mechanics ### **Creation of an LVF Position** 1\. The user deposits pTKN into the LVF vault. 2\. The protocol borrows the equivalent value of the paired asset from the LVF lending market. 3\. The user creates a full-range LP using both pTKN and the borrowed asset. 4\. The resulting LP token is locked as collateral within the LVF vault.
### **Self-Collateralization:** Because the LP position contains equal value of both the borrower’s asset and the debt asset, the vault treats this position as self-collateralizing, bringing the collateralisation rate up to 200%. This allows for 100% capital efficiency on initial the deposit value and enables direct entry into leveraged farming without requiring any initial paired liquidity asset to be supplied.
### Liquidation Threshold: The liquidation threshold is set at 83.33% LTV, which corresponds to the theoretical floor at which the borrowed asset component becomes insufficient to back its own repayment. The LP token must remain above this threshold or the position is liable to be liquidated.

# Risk Ownership (Borrowers) Leveraged Volatility Farming (LVF) empowers users to amplify yield and retain directional exposure, but it also requires active oversight and responsible strategy selection. Borrowers assume full responsibility for managing their own positions. **Borrowers must actively track and manage:** * **LP Value & Directional Exposure**: LVF positions remain fully exposed to the price of the pTKN. While users benefit from upside, they are also subject to downside movements. * **Oracle Validity**: Borrowers must verify that the oracle accurately reflects the fair market value of the pTKN and paired asset, and is sourced from a liquid, manipulation-resistant market. Oracle decay (liquidity fading over time) should also be monitored. * **Utilization & Interest Rates**: Borrowing costs are determined dynamically based on lending pool utilization. High utilization can drive interest rates sharply higher, especially during periods of market stress or constrained liquidity. * **Leverage Factor**: Higher leverage increases yield potential but narrows the margin before liquidation. Borrowers should calibrate leverage to suit their personal risk tolerance. * **Liquidation Risk**: While LVF uses a self-collateralizing structure where LPs already hold 50% of their position as the debt asset, positions can still be liquidated if the Loan-to-Value ratio (LTV) exceeds 83.33%. Liquidations are partial and aim to preserve remaining collateral but may still result in complete loss of capital. * **Pod Liquidity & Market Volatility**: Illiquid or highly volatile pools may experience slippage or delayed pricing reactions, especially during fast-moving market conditions. * **Any other factors that may reasonably impact the risk profile of a borrower’s position** There are no backstops or reimbursement mechanisms in the event of misconfiguration, mismanagement, or liquidation. Borrowers must take proactive steps to monitor health ratios, review their leverage settings, and validate oracle reliability. > *This is a permissionless system. If you are not fully confident in your Pod or strategy setup, consult a Peapods contributor before deploying capital.*
# Self-lending and Proof of Demand (LVF) ### **The Problem** In traditional DeFi lending systems, a market cannot form until liquidity is provided by a lender. This supply-first architecture creates a “cold-start” problem, particularly for long-tail or newly launched assets, where borrowing interest may exist but is unable to manifest. Without initial capital, interest rates remain flatlined, no revenue is generated, and no market signal emerges for potential suppliers. ### **The Solution** Peapods introduces a novel mechanism—Self-Lending—paired with a signaling framework known as Proof of Demand (PoD). These components allow a borrower to simulate both sides of a lending market in a single atomic transaction. By flashloaning the paired asset, momentarily supplying it, and then borrowing it back against a collateralized LP, the user triggers 100% utilization. This serves as an on-chain signal to external capital: yield exists here, and capital is needed. The process is: - Fully collateralized - Conducted in a single transaction - Permissionless and non-emissive The result is a market that can emerge spontaneously from user demand—without coordination, external incentives, or prior liquidity.
# How a Self-Lending Position is Created The self-lending lifecycle operates entirely within a single atomic transaction and interacts with multiple Peapods primitives (Pods, LVF Lending Vaults, and incentivised LP Pools): 1. **Flashloan Paired Asset**\ The user initiates a flashloan for the required paired asset (e.g., ETH or USDC). This mimics external capital and will be used to fund the lending pool momentarily. 2. **Supply to LVF Lending Pool**\ The flashloaned paired asset is deposited into the LVF lending pool associated with the target Pod. This mints a receipt token (e.g., ERC-4626 shares) representing their temporary supplier position. 3. **Wrap Base Token and Form LP**\ Simultaneously, the user wraps the base token (TKN) into pTKN and combines it with the receipt token to form a pTKN/Paired Asset LP. This LP is created using the incentivised AMM. 4. **Use LP as Collateral**\ The LP token is deposited into the LVF vault and registered as collateral for a new borrowing position. 5. **Borrow Back Paired Asset**\ The user borrows the same quantity of the paired asset that was initially flashloaned, using their LP as collateral. 6. **Repay Flashloan**\ The borrowed paired asset is used to repay the flashloan, completing the cycle. At the end of this transaction: - The user has created a valid LP-backed LVF position - The LVF lending pool is 100% utilized - No external supplier was needed - The interest rate curve is active and visible This design establishes demand-driven liquidity from zero and exposes the position to real yield accrual immediately.

# Proof of Demand (PoD) Mechanics Proof of Demand (PoD) is a foundational concept in Peapods' lending architecture. It formalizes what 100% utilization represents. Specifically, it signals that capital is fully borrowed and that borrowing demand is provably real, immediate, and under-supplied. Rather than using emissions, bribes, or external incentives to attract liquidity, PoD leverages interest rates as a dynamic market signal. When a Self-Lending Pod is initialized, utilization of the lending pair is set to 100%, simulating a state of full demand with no redeemable liquidity. This triggers a sequence of predictable, permissionless incentives.
### Key Mechanics **Utilization-Driven Rate Adjustment**\ The LVF lending pools employ a non-linear interest rate model. As utilization approaches 100%, borrowing APRs rise exponentially, increasing the reward for capital suppliers. **No Emissions Required**\ All yield offered to lenders is derived entirely from borrower-paid interest, not from protocol incentives. This makes supply-side returns fully demand-driven and sustainable. **Reverse Dutch Auction for Capital**\ High utilization advertises increasingly attractive APRs to the market. When the yield matches the risk appetite of lenders, capital enters. As supply arrives, utilization falls, and interest rates normalize.
This model allows borrowers to prove demand through their willingness to pay, removing the need for liquidity mining programs and incentives via emissions. Capital is only attracted when and where it’s needed which allows for real yield pricing and capital efficiency at every stage. # Dynamic Liquidity Self-Lending Pods introduce a fully autonomous liquidity model where utilization, interest rates, and price movement interact to determine both the cost and availability of capital without the need for external rebalancing or manual adjustments. This system enables highly efficient, soft-leveraged positions that respond fluidly to real market conditions. *** ### Utilization-Responsive Liquidity Behavior At deployment, a Self-Lending Pod is initialized at 100% utilization, simulating a fully borrowed lending market and forming a single-sided LP position. This configuration creates a liquidity curve that extends from the current price upward, enabling full directional exposure to the Pod asset (pTKN). As the system evolves, utilization dynamically adjusts in response to external market activity: **When pTKN price increases**:\ Arbitrageurs inject paired asset capital to capture profit. This reduces utilization, which lowers interest rates and makes borrowing more affordable. **When pTKN price declines**:\ Arbitrage becomes restricted due to the absence of paired capital. However, rising interest rates incentivize lenders to supply funds. This new liquidity enables downside arbitrage and gradually reduces utilization and borrowing costs. Utilization effectively becomes the system’s real-time signal, governing both the activation of liquidity ranges and the cost of borrowing—ensuring capital flows when and where it’s needed, without emissions or manual adjustments. *** ### Automated Liquidity Range Management Self-Lending Pods eliminate the complexity and manual upkeep typically associated with concentrated liquidity models like Uniswap v3. Instead of requiring users to manage price bands or reposition liquidity, range logic is embedded directly into the protocol’s interest rate model. High utilization acts as a signal that liquidity is “out of range,” which increases the interest rate for the lending pair. This incentivizes lenders to supply capital to restore balance. Conversely, when utilization drops, it reflects that liquidity is “in range,” resulting in lower borrowing costs and more active capital circulation. Because all Pods operate using full-range AMM infrastructure (x \* y = k), liquidity is always available and tradable, even during extreme price movements. This architecture removes the need for rebalancing and prevents the realization of impermanent loss, which is common in concentrated liquidity strategies. The result is a system that is easier to use, more capital efficient, more resilient under volatile conditions and void of the risk of realizing losses through rebalancing activities. ### Interest Rate Responsiveness and Position Management Leverage and liquidation thresholds in Peapods are initialized when a position is created, based on the amount of borrowed capital relative to deposited collateral. However, because positions are fully self-managed, users can adjust their leverage over time by adding collateral, repaying debt, or overborrowing to increase exposure. While these structural parameters define liquidation risk, the ongoing cost of maintaining a position is governed by the protocol’s dynamic interest rate model. As utilization increases, interest rates rise and borrowing becomes more expensive. When arbitrageurs or lenders supply capital, utilization falls, reducing interest rates and easing the cost of borrowing. This responsiveness ensures that borrowers are only charged a premium when liquidity is scarce. When supply is sufficient, borrowing becomes more affordable, enhancing the sustainability of leveraged positions. The result is a flexible system where users can actively manage both their exposure and their cost over time. # Implications for Scaling Self-Lending and Proof of Demand create a new primitive for DeFi liquidity deployment that benefits all parties within the Defi ecosystem: **Long-Tail Assets:**\ Any ERC-20 token can become a leveraged, yield-bearing asset without needing external liquidity, governance approval, technical lift or grants. **DAOs and Treasuries:** \ Idle assets can be deployed into self-sustaining LP positions while simultaneously creating yield, utilization, and revenue. **Composable DeFi Stack:** \ Other protocols can plug into Pods and LVF vaults, bootstrapping their own demand-led liquidity layers. This model fundamentally reverses DeFi’s traditional lifecycle since demand comes first **and then** supply follows via market signals. The prevailing result of this mechanism is that emissions and incentives are not required to bootstrap a fully functioning lending market with **both supply and demand.** This represents a generalized, scalable, and fully automated solution to bootstrapping on-chain liquidity without incentives. Self-Lending and PoD unlock permissionless, bottom-up capital formation for the next generation of decentralized markets.
# Net Interest Implications (LVF) All LVF borrowing on Peapods follows a standardized interest distribution model: * **90%** of interest paid by borrowers is allocated to lenders (pro-rata) * **10%** is retained by the protocol as non-emissive revenue In self-lending configurations, a borrower may also act as a supplier to the lending pool by using a flashloan-enabled loop. This entitles them to reclaim a proportional share of the lender-side interest distribution, effectively reducing their **net cost of capital**. This structure introduces a unique APR spread whereby external lenders receive the full gross yield, while self-lending borrowers pay significantly less without affecting protocol revenue or requiring emissions. This asymmetric structure introduces a number of implications which enable Peapods to uniquely provide a scenario in which both lenders and borrowers incentives are aligned, allowing both parties benefit together without subsidies or emissions.
# Interest Allocation: Case Study To illustrate how self-lending reduces net borrowing costs, consider a standardized example involving **User A**, who borrows $5,000 at 50% APR to open an LVF position. Instead of relying entirely on external lenders, User A supplies **$4,000 of the lending pool themselves** using a flashloan-enabled self-lending loop—meaning 80% of the interest paid to lenders is redirected back to them. ### **Interest Distribution Breakdown (User A)** | **Component** | **Amount** | | ---------------------------------- | ---------------------- | | **Total Interest Paid** | $2,500 (50% of $5,000) | | Interest to Lenders (90%) | $2,250 | | – Returned to User A (80% share) | $1,800 | | – Paid to External Lender (User B) | $450 | | Protocol Fee (10%) | $250 | | **Net Interest Cost (User A)** | **$700** | 📌 *By supplying the majority of the lending pool, User A effectively reclaims 80% of the interest paid to lenders—lowering their **real** cost from $2,500 to just $700. This drastically improves capital efficiency without impacting lender returns or protocol revenue.* *** #### # LVF Yield Scenarios: Borrower Profitability To assess the economic performance of self-lending strategies, we analyze User A’s profitability across various LVF yield environments. In each case, the user has $10,000 in LP exposure (2x leveraged via $5,000 borrowed capital) and pays a fixed net interest cost of $700 annually. ### **Profitability Under Varying LVF Yields** | **LVF Yield** | **Gross Yield** | **Net Interest Cost** | **Net Profit** | **Effective APR (on $5K)** | **External Lender APR** | | ------------- | --------------- | --------------------- | -------------- | -------------------------- | ----------------------- | | 50% | $5,000 | $700 | $4,300 | 86.0% | 45.0% | | 40% | $4,000 | $700 | $3,300 | 66.0% | 45.0% | | 30% | $3,000 | $700 | $2,300 | 46.0% | 45.0% | | 20% | $2,000 | $700 | $1,300 | 26.0% | 45.0% | | 10% | $1,000 | $700 | $300 | 6.0% | 45.0% | 📌 *User A remains profitable across a broad range of yield conditions, with increasing capital efficiency as volatility and yield rise. Even at 10% LP yield, the strategy remains net positive.* *** #### # APR Differential: Self-Lending vs External Lending This section compares the **same lending market** from the perspective of two different participants: * **User A**: A borrower who self-supplies 80% of the lending pool * **User B**: An external lender who contributes the remaining 20% Although both interact with the same interest rate curve, their **net APR outcomes diverge significantly** due to self-lending mechanics. **Effective APR Comparison** | **Role** | **Basis** | **% of Lending Pool** | **Gross APR** | **Net APR** | | -------------------------------------------- | --------------------------------- | --------------------- | ------------- | ----------- | | User A (Self-Lending) | $5,000 borrowed / $4,000 supplied | 80% | 50.0% | 14.0% | | User B (External Lender) | $1,000 lent | 20% | 45.0% | 45.0% | | **APR Spread** (Lender yield vs Borrow cost) | - | - | - | +31.0% | 📌 *This asymmetric structure enables lenders to earn full returns while borrowers dramatically reduce their net cost—without subsidy or emissions. It creates a capital-efficient win-win that aligns incentives between both roles.* # Yield Sensitivity and Break-Even Threshold We now examine how low LVF yield can drop before a self-lending LVF position reaches its break-even point. In this model, where User A’s net cost of capital is highlighted in the table at varying borrow rates but assuming the same split of external vs self-lending. Any LVF yield **above** this breakeven point transforms the position into a **yield-generating opportunity** and conversely, any yield **below** this threshold effectively behaves as a **funding rate**, or a net cost for holding leveraged exposure to the asset. This distinction is especially relevant in LVF, where not all participants are yield farmers. Some may be seeking to leverage long exposure to an asset, while others such as protocols sourcing liquidity may tolerate mild funding costs as a more cost-effective manner of liquidity sourcing vs existing models such as bribes or yield farming. The ability to support sustainable leveraged positions makes LVF a flexible and capital-efficient tool in a variety of strategic contexts. ### **Comparative Break-Even Thresholds by Borrow Rate** | **Borrow Rate** | **Annual Interest Paid** | **Net Cost (after Self-Lending)** | **Break-Even LP Yield** | | --------------- | ------------------------ | --------------------------------- | ----------------------- | | 50% | $2,500 | $700 | 7.0% | | 40% | $2,000 | $560 | 5.6% | | 30% | $1,500 | $420 | 4.2% | | 20% | $1,000 | $280 | 2.8% | | 10% | $500 | $140 | 1.4% | 📌 *As borrowing costs decline, the LP yield required to break even falls sharply, reaching as low as 1.4% at a 10% borrow rate. This reinforces the robustness of self-lending under varying market conditions.* # Lending (LVF) Peapods Finance offers a robust and modular lending system built upon a modified fork of Fraxlend. This architecture allows the protocol to create isolated lending pairs, where lenders can supply assets such as USDC and receive pfTKNs (eg. pfUSDC) in return. These pfTKNs act as yield-bearing receipts and represent the supplier's claim to future repayment. The uniqueness of Peapods' lending system lies in its isolated design where each lending pair operates independently, ensuring that risks are contained within individual pools. This means if a default or severe event occurs in one market, it will not impact the solvency of any other. As a result, the platform mitigates systemic risk, allowing for more predictable and safer participation. Additionally, the protocol's design ensures that any bad debt is socialized within the pair rather than across the protocol.
While inspired by Fraxlend, Peapods’ version is further optimized to support the Leveraged Volatility Farming (LVF) mechanics and to enhance receipt token composability across DeFi.
# Isolated Lending Peapods supports Isolated Lending markets via permissionless lending pools tied to individual Pods. These isolated pairs offer advanced users the ability to directly supply capital where demand is highest and interest rates are most attractive. ### Why Choose Isolated Lending? Isolated lending enables users to: * Target specific high-yield opportunities where demand for borrowing is concentrated. * Capture premium interest rates not yet accessible via Metavault routing. * React to Pod-level market signals (e.g., sustained 100% utilization, high volatility, or self-lending demand) faster than governance-directed strategies. By supplying directly to a lending pair, users retain full control over which assets they engage with and can maximize returns in scenarios where Metavaults are not yet allocated or are fully capped. However, with greater yield comes greater responsibility. ### Risk Ownership and Required Oversight Isolated lenders are solely responsible for performing due diligence on the Pod, token, and oracle behavior associated with the lending market. Participation in these markets requires ongoing monitoring of: * Pod health and LP liquidity * Oracle liquidity depth, price accuracy and resistance to manipulation * Utilization trends and interest rate movements * Borrower demand and volatility in the paired asset * Any other factors that may reasonably impact the risk profile of a lender's position There are no safety nets in isolated markets. If a Pod accrues bad debt (e.g., due to failed liquidation, stale or faulty oracle data, or sudden price collapse), all losses are socialized across active lenders, with no reimbursement or protection provided by the protocol.
> 🛑 **Caution**: There is no recovery mechanism for isolated lenders who suffer losses, all bad debt is socialized amongst lenders. You must be willing and able to assess and manage risk on your own. ### Metavaults Provide A Risk-Minimized Alternative For users seeking exposure to lending yields without managing position-level risk, Peapods offers Metavaults which are automated capital allocators backed by governance and an Insurance Fund. While yields from Metavaults may be lower than the top isolated markets, they offer a safer, passive alternative for users who prefer set-and-forget strategies. You can read more about [Metavaults here](/metavaults-lvf). # Withdrawing Liquidity When Utilization Reaches 100% When utilization in a lending pair reaches 100%, suppliers are not able to redeem their pfTKNs for the original asset through the standard withdrawal process. This is a standard scenario across all lending markets in DeFi. However, Peapods provides a novel solution which ensures that liquidity remains accessible thanks to pfTKN tradability on decentralized exchanges. This solution is outlined below. \ **T₀:** \ A supplier deposits USDC into a lending pair. In return, they receive pfUSDC—a receipt token that tracks their share of the lending pool. **T₁:**\ At a later time, the supplier wishes to redeem their pfUSDC for USDC. However, the lending pair is at 100% utilization, meaning all available USDC has been borrowed and is currently locked. **T₁ (Alternative):**\ Instead of waiting for borrowers to repay, the supplier can immediately sell their pfUSDC on a decentralized exchange. Since pfUSDC remains liquid, this exit option allows the lender to retrieve USDC (or another asset) from a willing buyer in the open market.
This exit strategy reinforces the composability and reliability of the system. Even under maximum stress, lenders maintain an accessible off-ramp. This feature, which is not present in other lending market, keeps capital flowing and preserves confidence in the liquidity layer. In LVF lending markets, suppliers can never get stuck, because the receipt token is liquid and tradable on DEXes through the very LP pool in which they are being lent to.
# Interest Rate Model This adaptive rate mechanism ensures sustainable market conditions for both Farmers and Lenders while maintaining capital efficiency. Peapods Finance uses a dynamic, utilization-based interest rate model derived from Fraxlend. This model adjusts borrowing costs according to current market conditions, with rates increasing as utilization rises. It ensures that lenders are rewarded more when demand is high, while keeping costs manageable for borrowers during low activity. The model is essential for driving real, emissions-free yield in LVF lending markets, and is particularly effective in scenarios like Self-Lending and Proof-of-Demand (PoD), where utilization begins at 100%. Interest rates in LVF Pods dynamically adjust based on utilization: * When utilization is high, **interest rates increase**, attracting external lenders who want to earn yield. * As new liquidity enters the pool, **interest rates decrease**, ensuring borrowers can efficiently access capital without excessive costs.
### Interest Model Core Parameters and Definitions | Parameter | Value | Description | | --------------------- | ------------- | --------------------------------------------------------------------------------------- | | UTIL\_PREC | 100,000 | Precision scalar for utilization (basis points: 100% = 100,000) | | VERTEX\_UTILIZATION | 92,000 | Utilization point at which the curve changes slope (92%) | | MIN\_TARGET\_UTIL | 95,000 | Lower bound of target utilization range (95%) | | MAX\_TARGET\_UTIL | 97,000 | Upper bound of target utilization range (97%) | | ZERO\_UTIL\_RATE | 157,680,000 | Base rate at 0% utilization (0.5% APR) | | MIN\_FULL\_UTIL\_RATE | 9,460,800,000 | Interest rate at 100% utilization with minimum pressure (30% APR) | | MAX\_FULL\_UTIL\_RATE | 1.5768e+12 | Maximum rate ceiling at 100% utilization (5,000% APR) | | VERTEX\_RATE\_PERCENT | 5e+17 | Defines rate acceleration post-vertex. Encodes both rate step (50%) and curve steepness | | RATE\_HALF\_LIFE | 129,600 | Half-life in seconds (\~1.5 days) for rate smoothing | | RATE\_PREC | 1e+18 | Rate precision for internal math consistency | # Metavaults (LVF) Metavaults function as decentralized, trustless liquidity routers which automate capital allocation while maintaining structural safeguards and optimizing yield for its suppliers. Metavaults are asset-specific (e.g., ETH, USDC) smart contracts that aggregate deposits and deploy them across LVF lending markets based on governance-defined parameters. Instead of requiring users to allocate capital manually to individual Pods, Metavaults automate this process by routing liquidity dynamically to the most capital-efficient and high-yielding opportunities. All allocations are made to whitelisted Pods, as voted on by vlPEAS holders\*, who also define allocation caps and rebalancing schedules. Capital flows as follows: * **Lender → Metavault** * **Metavault → Lending Pair** * **Lending Pair → LVF Borrower** * **Borrower → LP Creation** (using their own pTKN + borrowed capital) * **Interest → Metavault** (yield accrues from borrower payments) This system ensures efficient liquidity deployment, passive yield generation, and protocol-wide yield optimization. Governance plays a critical role, with vlPEAS holders controlling which Pods receive allocations, maximum caps per Pod, and enforcing segmentation of risk across the vault portfolio. Voting outcomes are codified on-chain and throttle how much capital each Pod can receive per epoch.
# Metavault Mechanics Metavaults are designed to minimize idle capital, enable non-technical users to access protocol yield passively, and reduce liquidity fragmentation across the system. Deposits are pooled into modular strategy contracts that isolate risk, ensuring that if a downstream Pod underperforms or is liquidated, only its allocated portion of vault capital is affected. A governance system that is controlled by vlPEAS\* determines which Pods can receive allocations, and how much they can be allocated from the Metavault. Through this system, it is the role of vlPEAS voters to conduct due diligence risk assessments on any Pod seeking to enable or increase allocation from the Metavault. This includes examining the integrity of the Oracles used, the amount of liquidity available, the underlying asset (TKN) and any other factors that may contribute to lending risks. Metavaults target 80% Utilization to ensure that funds are available to be withdrawn by lenders as they desire, but this value can fluctuate depending on in-market activity and lender withdrawals. ### Key user benefits: * **Passive Income**:\ Earn lending yield through a risk-managed strategy which allocates to the greatest risk-adjusted opportunities without requiring active monitoring and adjustments. * **Easy to Use**:\ Metavaults are a simple and accessible strategy making it a prime candidate for all parties from DAOs to first-time Defi users. * **Risk Controls**:\ vlPEAS voting on caps per Pod and whitelisting ensure that user capital is risk-managed whilst the diversifaction of lending allocations ensures that risk is not isolated to a single lending pair. * **Aligned Incentives:**\ As vlPEAS earn a Revenue Share which is derived from LVF Revenue, these voters are incentivised to allocate capital in a way that secures the highest yield for lenders, whilst meeting the demand of borrowers which ensures maximum liquidity efficiency for the entire Protocol.
# Insurance Fund (Metavaults) Peapods Metavaults are protected by an Insurance Fund, designed to provide a safety buffer in the event of unexpected losses or bad debt events. #### Fund Size & Backing * The Insurance Fund is backed by a minimum reserve of $200,000. * These funds are reserved specifically for the purpose of risk mitigation across all active Metavaults. * Governance (via vlPEAS votes) may choose to increase this minimum reserve threshold, but it can never be lowered below $200,000. #### Purpose & Scope of Use * The Insurance Fund is strictly limited to covering bad debt scenarios incurred by any Metavault. * **Decision-Making Authority**: * Deployments from the Insurance Fund must be approved by either: * A vlPEAS governance vote, or * The Peapods Finance core team, if urgent action is required. #### Limits of Protection * The Insurance Fund is capped by its available balance. * Once depleted, no further coverage is available until additional funds are allocated. * The Insurance Fund does not guarantee against all losses, but instead provides a structured safety net to minimize systemic risk. *** > **Disclaimer**\ > *The Insurance Fund should not be relied upon as a guarantee of repayment or full coverage for all participants. Users assume the edge-case risk that losses may exceed the available balance of the fund.* # Liquidations (LVF) Liquidation is the mechanism by which the protocol reclaims borrowed funds when a user’s position becomes too risky. In Peapods, all leveraged positions are backed by LP tokens containing both a volatile asset (pTKN) and a paired base asset. This collateral model enables a safer liquidation process whereby half of the position already consists of the required debt asset to be repaid. This protects both lenders and borrowers from excessive downside during the liquidation process. By enforcing a conservative **83.33% Loan-to-Value (LTV)** threshold, Peapods ensures that positions are liquidated **before** they become undercollateralized. Liquidators are economically incentivized to repay debt in exchange for discounted collateral, while borrowers retain any remaining equity after the position is resolved. The use of paired-asset LPs creates natural buffers that allow the system to absorb volatility without generating bad debt. Liquidators may carry out a partial liquidation in which they choose to liquidate only a portion of the position if full liquidation would be unprofitable due to slippage. The remaining collateral can be unwound in follow-up transactions once price stabilizes or arbitrage corrects the market. Since part of the debt is always covered by the stable paired asset, the protocol remains solvent even if pTKN experiences moderate post-liquidation price slippage.
# Understanding Liquidation Prices In Leveraged Volatility Farming (LVF), understanding how your **liquidation price adjusts in real time** is key to managing risk. Your position’s liquidation threshold is directly influenced by the price ratio between your paired asset (e.g. pfWETH, pfUSDC) and your Pod asset (pTKN). This is because **your borrow debt is denominated in the paired asset**. As that asset changes in value relative to pTKN, your liquidation price dynamically shifts: * If the **paired asset strengthens** against pTKN, your **liquidation price rises**, increasing your risk of liquidation. * If **pTKN strengthens** against the paired asset, your **liquidation price falls**, giving you more room to absorb volatility. In other words, liquidation risk is driven not just by pTKN’s absolute price, but by its **relative performance**. Users should always consider the volatility and correlation between their chosen pair when estimating how resilient their position is to market movement. # Liquidation Execution In Leveraged Volatility Farming (LVF), user positions are collateralized by LP tokens composed of a deposited pTKN and a borrowed paired asset. These LP tokens serve as both the yield-bearing position and the collateral backing the loan. Once the position’s **Loan-to-Value (LTV)** exceeds **83.33%**, it becomes eligible for liquidation. Liquidation is **permissionless** and **atomic**, meaning a third party may repay any amount of the outstanding debt and receive **110% of the repaid amount** in collateral. The 10% bonus comes directly from the borrower’s equity. Importantly, liquidators are not required to close the entire position. If slippage or LP depth would make a full liquidation unprofitable, **they may choose to execute partial liquidations**, seizing only as much collateral as is profitable in that moment. This makes liquidation behavior responsive to real-time market conditions and reduces the risk of cascading price impact. **Example — Full Liquidation at Threshold** | **Metric** | **Value** | | ------------------------ | ----------- | | Total Collateral Value | $10,000.00 | | Max LTV | 83.33% | | Debt at Liquidation | $8,333.00 | | Liquidator Repays | $8,333.00 | | Liquidator Receives | $9,166.30 | | **Liquidator Profit** | **$833.30** | | Borrower Retains | $833.70 | | **Borrower Equity Lost** | **50%** | **Formula Summary** * **Max Debt** = Collateral × 83.33% * **Liquidator Reward** = Debt Repaid × 110% * **Remaining Collateral** = Total Collateral − Liquidator Reward * **Borrower Equity Lost (at threshold)** = 50% # Required Declines to Trigger Liquidation #### Required Decline in pTKN (vs Paired Asset) to Trigger Liquidation The following table shows how much pTKN would need to decline (in % terms) **relative to the paired asset** in order to reach the liquidation threshold of **83.33% LTV**, which corresponds precisely to **2.66x leverage**. The relationship between leverage and LTV is: To determine the maximum tolerable decline before hitting 83.33% LTV, we use: | **Leverage Factor** | **LTV** | **Max Tolerable Decline in pTKN (vs Paired Asset)** | | ------------------- | ------- | --------------------------------------------------- | | 1.33x | 16.5% | 96.1% | | 1.66x | 33.0% | 84.3% | | 2.00x | 50.0% | 64.0% | | 2.33x | 66.6% | 36.3% | | 2.66x | 83.0% | 0.70% (liquidation imminent) | 📌 *At 2.66x leverage, you are at the liquidation threshold. Any adverse movement in pTKN vs the paired asset will trigger liquidation. At lower leverage levels, pTKN can decline significantly before triggering liquidation, providing more buffer.* Understanding these thresholds helps inform responsible leverage decisions, especially when selecting volatile or highly correlated assets.
# Visualizing Strategy Risk The following chart illustrates how different LVF configurations affect your liquidation buffer. It shows the **% decrease in pTKN required to reach liquidation**, based on different leverage profiles. **Breakdown of Strategies:** * 🟢 **Standard LTV (2.0x Leverage)**\ A typical LVF setup using only the user’s pTKN and borrowed paired asset. Provides a strong buffer (up to 64%) before liquidation.
* 🟡 **Looped LTV (2.33x Leverage)**\ A more aggressive strategy where the user borrows against their LP, uses the borrowed paired asset to buy more pTKN, and loops it into a new LVF position. This reduces the buffer to 53%.
* 🔵 **Withdrawn LTV (2.33x Leverage)**\ Similar borrowing profile to the looped strategy, but the paired asset is withdrawn and not recycled back into the system. This configuration is the most aggressive, with only a 36% buffer.
These variations illustrate how **strategy choice impacts liquidation risk**. Leverage is not inherently unsafe but understanding how it affects your liquidation buffer and managing your strategies within your risk tolerance is essential.
# Bad Debt Buffer Peapods’ LP-based collateral structure introduces inherent protection against insolvency. Because 50% of each LVF position is composed of the **paired asset** (e.g. pfUSDC), this portion is automatically seized by the liquidator and used to directly repay part of the debt. For a liquidator to be financially incentivised to execute a liquidation, the remaining debt including the **10% liquidation bonus** must be recovered by selling the volatile side (pTKN) since the other half of the position is already secured as the debt asset. This structure creates a **built-in price buffer**: the pTKN price can fall significantly during liquidation while still allowing the system to fully repay the liquidator and avoid any bad debt. ### **Example: Price Tolerance at Liquidation** | **Position Value** | **$2,000** | | ------------------------------- | ------------------------- | | Paired Asset | $1,000 (seized directly) | | pTKN | 10 tokens @ $100 = $1,000 | | Debt at 83.33% LTV | $1,666.60 | | Liquidator Payout (110%) | $1,833.26 | | Amount to Recover via pTKN | $833.26 | | **Required Average pTKN Price** | **$83.33** | | **Lowest Wick (linear model)** | **$66.66** | | **Max Drop from $100** | **33.34%** | > 📌 *Assuming liquidation occurs at the 83.33% LTV threshold, pTKN can fall by up to **33.34%** to a low of **$66.66** during a linear liquidation without incurring any bad debt and whilst still providing the 10% liquidator reward.* # Links # Contract Addresses **Token Contract** PEAS token is currently live on Ethereum, Arbitrum, Base and Mode. Bridging can be done [through our dApp](https://peapods.finance/app/bridge). In the background, our bridge utilizes LayerZero infrastructure using lock/mint and burn/mint technology, making sure no additional PEAS are ever coming into circulation when expanding to additional chains. Our token address is the same on all chains: 0x02f92800F57BCD74066F5709F1Daa1A4302Df875 [Ethereum](https://etherscan.io/address/0x02f92800F57BCD74066F5709F1Daa1A4302Df875)\ [Arbitrum](https://arbiscan.io/address/0x02f92800F57BCD74066F5709F1Daa1A4302Df875) \ [Base](https://basescan.org/address/0x02f92800F57BCD74066F5709F1Daa1A4302Df875) \ [Mode](https://modescan.io/address/0x02f92800F57BCD74066F5709F1Daa1A4302Df875)\ \ **The main Liquidity Pools for PEAS can be seen below:**\ \ **Ethereum - Uniswap V3** * [PEAS-DAI](https://app.uniswap.org/explore/pools/ethereum/0xae750560b09ad1f5246f3b279b3767afd1d79160) * [PEAS-ETH](https://app.uniswap.org/explore/pools/ethereum/0x44c95bf226a6a1385beaced2bb3328d6afb044a3) * [PEAS-USDC](https://app.uniswap.org/explore/pools/ethereum/0x5268006a9da67c19a25aeb594f8e921867c56b36) #### Ethereum - Uniswap V2 * [PEAS-ETH](https://app.uniswap.org/explore/pools/ethereum/0x9af2bfb7117d24eb97961ce6f747cd0c80482606) #### BASE - Aerodrome V3 * [PEAS-USDC](https://www.dextools.io/app/en/base/pair-explorer/0xb0a65b3a6f9da0e5eb057e0d5327deddbe17309e) * [PEAS-pOHM](https://www.dextools.io/app/en/base/pair-explorer/0xd533986cbb79a015fe9f6c8f92dbb35cc998c37e) * [PEAS-pwBLT](https://www.dextools.io/app/en/base/pair-explorer/0x2787d72d17db123351ebe903237e761ebcf529d6) #### BASE - Uniswap V3 * [PEAS-USDC](https://app.uniswap.org/explore/pools/base/0x5abdb204b1e5365fc523b6aac9d0fc405bf5a72b) #### Arbitrum - Camelot Algebra * [PEAS-ETH](https://info.camelot.exchange/pair/arbitrum-one/v3/0x44cc8b40b1483e62e59ef937441ba6aa8e584a77) * [PEAS-USDC](https://info.camelot.exchange/pair/arbitrum-one/v3/0xcf71459248557807b87cf988f30ae7845f7bd6d5) #### Arbitrum - Uniswap V3 * [PEAS-ETH](https://app.uniswap.org/explore/pools/arbitrum/0x23d17764f41aea93fdbb5beffa83571f0bf3f8b2) #### Mode - Kim Exchange V4 * [PEAS-USDC](https://www.dextools.io/app/en/mode/pair-explorer/0x54f0b20d4e140d9beb0e2fadb4f3c425621b9243) # Technical CAs ## **IndexManager** ETH: 0x6eFFcF94993d6a6081204fc3C30473468Eb7666E Arbitrum: 0x64511ccE99ab01A6dD136207450eA81263b14FD8 Base: 0x556059e80CB0073D4A9547081Cf0f80cBB94ec30
## **LeverageManager** ETH: 0x4e6EF371C9CDDE8C3e6716AffEEBaD14C8c62D0B Arbitrum: 0x3f2257B6f1fd055aEe020027740f266127E8E2B0 Base: 0x31E35550b15B2DFd267Edfb39Dd9F3CD1c6ab82D
# Audits Here you can see a link to each of the Audits that Peapods Finance has undergone ## Green Arrows Audits 1. [yAudit](https://reports.yaudit.dev/reports/01-2024-Peapods/) 2. [SourceHat](https://sourcehat.com/audits/PeapodsFinance/) ## LVF Audits {% file src="/files/6kO83ufF6WbUpuzHLFUi" %} {% file src="/files/mLXWCqDv8T3qB3R2nNAe" %} {% file src="/files/9uRA1Nim58VkFOgzLWcM" %} # Socials * [Website](https://peapods.finance) * [DApp (Beta)](https://beta.peapods.finance) * [DApp](https://peapods.finance/app) * [Coingecko](https://www.coingecko.com/en/coins/peapods-finance) * [Etherscan](https://etherscan.io/token/0x02f92800F57BCD74066F5709F1Daa1A4302Df875) * [Telegram](https://t.me/PeapodsFinance) * [Twitter/X](https://x.com/peapodsfinance) * [Medium](https://medium.com/@peapodsfinance) * [Youtube](https://youtube.com/@peapodsfinance) # Glossary
TermDefinition
$PEASThe native utility token of Peapods Finance, used for governance, protocol fees, and staking rewards.
$pTKNThe wrapped version of a token within Peapods Finance, enabling it to participate in volatility farming and liquidity mechanisms.
$TKNThe underlying asset in a Peapods liquidity pool, which can be wrapped into its corresponding pTKN for use in the protocol.
Arbitrage (Arb)A trading strategy that exploits price differences between different markets or liquidity pools to make a profit.
BetaAn early stage of a product launch where users test functionality and provide feedback before a full release.
BorrowingThe act of taking out an asset (typically stablecoins or paired assets) against collateral to use in trading or liquidity farming.
CBR (Exchange Rate)The exchange rate mechanism used in Peapods to determine the value of Collateral Backing Rate of pTKN:TKN over time.
CBR APRThe annualized percentage rate (APR) associated with the CBR mechanism.
Classic LPA traditional liquidity pool where users deposit two assets in equal value to facilitate trading and earn swap fees.
Fixed DiscountA discount mechanism where borrowers can acquire assets at a predetermined reduced price.
Impermanent Loss (IL)A temporary loss experienced by liquidity providers when the price of deposited assets changes relative to their initial value.
Interest RateThe cost of borrowing an asset, determined dynamically by supply and demand in the liquidity market.
Isolated LendingA lending model where risk is contained within a specific market or asset pair, preventing liquidity from being affected by external volatility.
Leveraged Volatility Farming (LVF)A farming mechanism that allows users to amplify their exposure to volatility yield by borrowing paired assets without liquidation risk.
LVF APRThe annualized percentage rate (APR) for leveraged volatility farming positions, representing the return based on volatility yield and borrowed funds.
Liquidity Pool (LP Pool)A smart contract that holds two assets, enabling decentralized trading and generating fees for liquidity providers.
Liquidity Provider (LP)A user who supplies assets to a liquidity pool in exchange for a share of trading fees and rewards.
Meta-VaultsSmart liquidity vaults that automatically allocate capital across different liquidity pools to optimize returns.
Proof-of-Demand (POD)A mechanism where borrowers create artificial demand for liquidity, increasing utilization rates and attracting external suppliers.
Security AuditsReviews of smart contract code to identify and fix vulnerabilities before deployment.
Self-Lending PODs (DCLP)A borrowing mechanism that allows users to lend to themselves, instantly bootstrapping liquidity without waiting for external suppliers.
Soft LeverageA borrowing structure in LVF where users increase their position size with reduced liquidation risks vs standard leverage markets.
Stable-Yield FarmersUsers who supply Paired Asset liquidity in exchange for yield, without taking exposure to price volatility.
Treasury AccrualThe process of accumulating protocol revenue to fund operations, buybacks, or incentive programs.
vlPEAS (Vote-Locked PEAS)A governance token that allows holders to participate in liquidity allocation decisions and earn rewards.
Volatility Farming (VF)A strategy where users earn yield based on price fluctuations of assets instead of just price appreciation.
Volatility FarmersUsers who borrow liquidity to farm volatility yield, profiting from price swings of an asset.
# Common Terms
TermDefinition
$PEASThe native utility token of Peapods Finance, used for governance, protocol fees, and staking rewards.
$pTKNThe wrapped version of a token within Peapods Finance, enabling it to participate in volatility farming and liquidity mechanisms.
$TKNThe underlying asset in a Peapods liquidity pool, which can be wrapped into its corresponding pTKN for use in the protocol.
Arbitrage (Arb)A trading strategy that exploits price differences between different markets or liquidity pools to make a profit.
BetaAn early stage of a product launch where users test functionality and provide feedback before a full release.
BorrowingThe act of taking out an asset (typically stablecoins or paired assets) against collateral to use in trading or liquidity farming.
CBR (Exchange Rate)The exchange rate mechanism used in Peapods to determine the value of Collateral Backing Rate of pTKN:TKN over time.
CBR APRThe annualized percentage rate (APR) associated with the CBR mechanism.
Classic LPA traditional liquidity pool where users deposit two assets in equal value to facilitate trading and earn swap fees.
Fixed DiscountA discount mechanism where borrowers can acquire assets at a predetermined reduced price.
Impermanent Loss (IL)A temporary loss experienced by liquidity providers when the price of deposited assets changes relative to their initial value.
Interest RateThe cost of borrowing an asset, determined dynamically by supply and demand in the liquidity market.
Isolated LendingA lending model where risk is contained within a specific market or asset pair, preventing liquidity from being affected by external volatility.
Leveraged Volatility Farming (LVF)A farming mechanism that allows users to amplify their exposure to volatility yield by borrowing paired assets without liquidation risk.
LVF APRThe annualized percentage rate (APR) for leveraged volatility farming positions, representing the return based on volatility yield and borrowed funds.
Liquidity Pool (LP Pool)A smart contract that holds two assets, enabling decentralized trading and generating fees for liquidity providers.
Liquidity Provider (LP)A user who supplies assets to a liquidity pool in exchange for a share of trading fees and rewards.
MetavaultsSmart liquidity vaults that automatically allocate capital across different liquidity pools to optimize returns.
Proof-of-Demand (POD)A mechanism where borrowers create artificial demand for liquidity, increasing utilization rates and attracting external suppliers.
Security AuditsReviews of smart contract code to identify and fix vulnerabilities before deployment.
Self-Lending PODs (DCLP)A borrowing mechanism that allows users to lend to themselves, instantly bootstrapping liquidity without waiting for external suppliers.
Soft LeverageA borrowing structure in LVF where users increase their position size with reduced liquidation risks vs standard leverage markets.
Stable-Yield FarmersUsers who supply Paired Asset liquidity in exchange for yield, without taking exposure to price volatility.
Treasury AccrualThe process of accumulating protocol revenue to fund operations, buybacks, or incentive programs.
vlPEAS (Vote-Locked PEAS)A governance token that allows holders to participate in liquidity allocation decisions and earn rewards.
Volatility Farming (VF)A strategy where users earn yield based on price fluctuations of assets instead of just price appreciation.
Volatility FarmersUsers who borrow liquidity to farm volatility yield, profiting from price swings of an asset.
# TKN Acronyms | Acronym | Meaning | | ---------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | **TKN** | The original asset or token before being wrapped or abstracted into different forms within Peapods Finance. | | **pTKN** | The wrapped version of a token within Peapods Finance, enabling it to participate in volatility farming and liquidity mechanisms. | | **spTKN** | A staked LP receipt token representing a liquidity provider’s position within a Pod’s incentivized liquidity pool, allowing them to earn additional rewards. | | **aspTKN** | A staked LP receipt token similar to **spTKN**, but with **auto-compounded yield**, ensuring earned rewards are continuously reinvested for maximum efficiency. | | **pvTKN** | A yield-bearing token representing a user's **lending deposit within a MetaVault**, allowing capital to be dynamically allocated across multiple Pods. | | **fTKN** | A yield-bearing token representing a user's **lending deposit directly into a specific Pod**, earning interest from that Pod’s borrowing activity. | | **vlTKN** | A wrapped version of **TKN** with **special governance capabilities**, allowing holders to participate in governance decisions and direct liquidity flows within Peapods Finance. | # How To Guides # How to create a Pod https\://beta.peapods.finance/ **Step 1 - Pod Asset** * Go to the Peapods Finance DApp and click **Create Pod**. * Choose **Single-Asset** if you’re creating a Pod with one token or select **Index** if you would like to create a Pod with multiple tokens. * Enter the contract address of the token(s). * *(Optional)* Enable **Leveraged Volatility Farming (LVF)** by checking the box. This option is available for Single-Asset Pods only.
**Step 2 - Configuration** * Enter a **name** and **ticker symbol** for your Pod. * Select the **paired asset** from the drop-down menu. This asset will be used for the Pod’s incentivized Liquidity Pool.
**Step 3 - LVF (Leveraged Volatility Farming) *****(Optional)*** * Choose if you would like your Pod to be a **Self-Lending Pod** (default: Yes). * Select an **Oracle** to track the token’s price: * **Uniswap V3 Pool** (enter contract address). You can find this by: * Browsing [Uniswap’s Pool Explorer](https://app.uniswap.org/explore/pools/) * Checking **Pair Info** on **Dexscreener** or **Dextools** * **Chainlink Price Feed** (if available) * If the **pairing asset** differs from the Oracle’s pairing asset, provide an additional Oracle to track that price using the same methods.
**Step 4 - Fees** * Adjust fees based on your strategy. Suggested settings vary by asset type. * **Wrap Fee** – % users pay to enter the Pod (*keeping this low is advised if you want more people to join your Pod*). * **Unwrap Fee** – % users pay to exit (*can be slightly higher to encourage sticky TVL*). * **Cooldown Period** – Users can avoid the Unwrap Fee by waiting a set number of days. * **AMM Buy & Sell Fees** – % taken from all trades, primarily captured from MEV arbitrage. If you are unsure of which settings to use, we have provided a guide to help you Choose Pod Fee Settings.
**Step 5 - Distribution** * Set **% of revenue to burn pTKN** (higher = more passive holding incentive, lower = more LP rewards). * Set **% for Partner Share** (up to 5% of Pod revenue, paid in pTKN, or 0% if not needed).
**Step 6 - Confirmation** * Review your settings and **Deploy** your Pod by clicking on "Deploy Pod" and executing the transaction prompt within your wallet.
**Pod Deployment Complete!**\ Once your Pod has been successfully Deployed, you will receive a notification on screen, similar to the one below. Your Pod will be available to discover on the Volatility Farming page within 60 seconds and you will be able to begin to Wrap into your Pod.

# How to Wrap into a Pod **How to Wrap an Asset into a Pod** 1. **Select Your Pod**:\ Start by locating and selecting your Pod on the [Peapods homepage](https://beta.peapods.finance). You’ll be redirected to the Pod’s dedicated page.
2. **Review Pod Information**:\ On the Pod page, you'll find all relevant statistics, including the **fee structure** and **revenue distribution**. For new Pods, all of the performance metrics will be blank as the Pod has no TVL yet. To wrap your asset, select the **“Farm Volatility”** button.
3. **Wrap Your Asset**:\ Ensure the **toggle** is set to **“Wrap”**, then deposit your TKN (token). The interface will display how many **pTKN** you’ll receive in return.
4. **Complete the Transaction**:\ Follow the prompts and finish the transaction in your wallet. # How to Farm Volatility ### Getting Started Once you have acquired your **pTKN** (see [How to Wrap into a Pod](/how-to-guides/how-to-wrap-into-a-pod)), you can start **Volatility Farming** by providing liquidity (LP). Every LP position consists of **50% pTKN** and **50% Paired Asset**.
### Step 1: Selecting Your Volatility Farming Position 1. Choose how much **pTKN** you want to provide as liquidity. 2. By default, the protocol will borrow an equal value of the **Paired Asset**, creating a **2x Leverage Factor (LF)**. This means your **debt matches the value of assets deposited**.
### Step 2 (Optional): Adjusting Leverage Settings For more control over your position, you can adjust your **Leverage Factor (LF)** using the **Advanced Settings**: * **1x LF (No Leverage)**: You provide an equal amount of **pTKN** and **Paired Asset**, with no borrowing involved. * **1x - 2x LF**: The position is created using a mix of **depositing and borrowing** the **Paired Asset** to form the 50/50 LP which lowers the leverage factor and **reduces the liquidation price**. * **>2x LF**: No **Paired Asset** deposit is required. Instead, excess **Paired Asset** is sent to your wallet. The position is opened at higher leverage factor and the debt value exceeds the value of your deposited assets, increasing **liquidation price**.
### Step 3: Reviewing Your Position Once you've set your LP preferences, the protocol will generate a **summary** of the steps it will execute to create your position as well as a comprehensive Position Summary which can be found under the "Outcome" in the summary.
#### The Comprehensive Position Summary Includes: * **Loan-to-Value Ratio** * **Liquidation Price** * **Expected Yield & Expenses** * **Projected APY** Review these details carefully to ensure they align with your risk and yield objectives.
### Step 4: Opening Your Volatility Farming Position Once you're satisfied with your setup: 1. Click **"Deposit"** to confirm your Volatility Farming position. 2. Approve the transaction in your wallet. 3. Your LP position will be created, and you will start **earning yield** based on wrapping/unwrapping activity in the Pod. You can monitor and adjust your position anytime through the Peapods **Dashboard** via the [**My Portfolio & Yields** page](https://beta.peapods.finance/me). # Volatility Farming **Volatility Farming** is a method of earning yield based on the fluctuations in the price of assets. It leverages price discrepancies between wrapped tokens **(pTKN)** and their underlying assets **(TKN)** to generate profits for liquidity providers. * **Arbitrage and Volatility:**\ As the price of the underlying token (**TKN**) fluctuates, the price of the wrapped token (**pTKN**) does not immediately reflect these changes, creating arbitrage opportunities. When the price of TKN moves but **pTKN** remains stable, arbitrageurs can buy **pTKN** at a discount or sell it at a premium, depending on the situation. * **Protocol Revenue:** \ These arbitrage transactions help generate real yield for liquidity providers by collecting fees from wrapping, unwrapping, and trading actions.
# Leveraged Volatility Farming (LVF) **LVF** is an advanced farming strategy that allows users to amplify their yield by leveraging volatility. Users can borrow paired assets to combine with their **pTKN** to create a leveraged liquidity position, allowing them to farm with 2x the size of their **pTKN** value. * **Soft Leverage:**\ LVF uses a self-collateralizing borrowing mechanism called Soft Leverage. This allows users to earn double the yield from volatility farming with a reduction in the typical liquidation risks associated with traditional leverage. * **Volatility Farming Efficiency:**\ LVF amplifies the returns from volatility farming, making it more efficient and attractive for users. Users participate by either borrowing paired assets to farm volatility (Volatility Farmers) or supplying liquidity to receive stable yield (Stable-Yield Farmers). # Pods Pods are the foundation of the Peapods protocol, allowing users to wrap one or more underlying assets into a single ERC-20 token. Pods enable volatility farming and generate yield from market fluctuations. * **Flexible:** Pods can take the form of an index by [wrapping](#wrapping) multiple assets, or a synthetic version of a singular asset. * **Fully Collateralized:** Pods are always 100% backed by the underlying assets, ensuring security and transparency. * **Value Accrual:** Over time, Pods can accrue in value versus TKN if they include a pTKN burn fee (see [Protocol Fees](/pods-2/fees)). * **Arbitrage Opportunities:** When the price of the wrapped token (pTKN) deviates from the underlying asset (TKN), arbitrageurs can take advantage of this discrepancy, generating fees for the protocol.

Each pTKN burn increases the value of each pTKN vs TKN

## Multi-Asset Pods All multi-asset Pods on Peapods have a set weight per asset that make up the Pod when created. These Pods do not depend on the market value of the tokens and anyone can create them at any time. ## Decentralized & Trustless In contrast to conventional and certain crypto methodologies which function off a more centralized asset management style of structure, our framework is entirely decentralized which means that there is no central management from the team or any individual at any stage after a Pod has been launched. Investors can engage autonomously and, by becoming a fund liquidity provider, earn fees based on asset volatility. # Green Arrow Pods Our first iteration of Pods (Legacy Pods) deployed on the Peapods protocol were backed 1:1 by their underlying assets with no deviation to this backing. All future versions will be built as Green Arrow Pods and will include the option to include a burn fee which uses a portion of (un)wrap fees to burn the Pod token (pTKN). This mechanism will increase the backing of each pTKN with every (un)wrap transaction through the Pod which means that the value of pTKN continues to increase beyond the initial 1:1 backing ratio of pTKN:TKN. As a result, each pTKN can (excl. fees) unwrap more TKN than was initially wrapped to mint the token.

Each time fees are accrued by the protocol, a portion of these are used to burn pTKN and increase the backing of TKN per pTKN.

## How do Green Arrow pods work? When a Pod is created, the creator has the option to add a Burn Fee % to the Pod. This determines the portion of fees used to burn Pod tokens (pTKN) whenever fees are accrued to the Pod. The underlying assets of the Pod (TKN) remain unchanged which results in an increase in the ratio of TKN backing per pTKN. Pod token holders can unwrap their pTKN at any time and claim a % of the underlying TKN equal to their % holding of pTKN. This means a user can increase exposure to TKN by passively holding pTKN.\ \ The protocol uses a formula called a Collateral Backing Ratio (CBR) to show the value of pTKN measured against TKN. This formula is determined by dividing the underlying TKN collateral by the total supply of pTKN. As pTKN supply is always reducing vs the underlying TKN collateral, this number will always increase.\ \ Users can use the below formula to determine the quantity of TKN they can expect to receive when unwrapping pTKN;\ (pTKN\*CBR)\*(100%-Unwrap Fee%)\ \ Using pPEAS as an example, this formula would look like this;\ (pPEAS\*CBR)\*0.993

pTKN supply is reduced via the burn fees, whilst the underlying TKN collateral remains the unchanged, resulting in a higher claimable ratio of TKN per pTKN held.

# LVF Pods ### Introduction LVF Pods are a core component of **Leveraged Volatility Farming (LVF)**, providing the infrastructure that enables leveraged exposure to volatility while ensuring efficient liquidity utilization. By allowing users to borrow and lend within a structured LP framework, LVF Pods enhance capital efficiency and unlock new yield-generating opportunities in DeFi. *** ### What Are LVF Pods? LVF Pods function as specialized liquidity pools where users can participate in two distinct roles: * **Volatility Farmers** – Users who leverage an LVF Pod by borrowing the paired asset to farm volatility. * **Stable-Yield Farmers (Lenders)** – Users who supply the paired asset to the LVF Pod in exchange for yield. Each LVF Pod is designed to optimize liquidity flow by ensuring that leveraged farming positions remain sustainable and efficiently collateralized. *** ### How LVF Pods Work 1. **A Volatility Farmer** borrows the paired asset from the LVF Pod. 2. The borrowed asset is combined with their existing collateral to create an LP position. 3. This LP position is deployed within the protocol to generate yield from volatility farming. 4. **Yield is compounded back into the Farmer's position, while lenders earn yield from interest accrued by borrowers.** 5. Farmers benefit from **amplified rewards**, while lenders earn stable yields, **paid in the same token they supply—without emissions.** #### Key Features of LVF Pods * **Soft Leverage** – LVF Pods enable leveraged exposure to volatility while mitigating liquidation risk. * **Collateralized Borrowing** – Borrowed assets are secured by an LP position composed partly of the borrowed asset. * **Capital Efficiency** – The lending market dynamically adjusts based on supply and demand, optimizing returns for all participants. *** ### Benefits of LVF Pods #### For Volatility Farmers: ✅ **Leveraged Exposure** – Amplify farming rewards without traditional liquidation risks. ✅ **Single-Side Exposure** – No need to split assets; maintain full exposure to your preferred token. ✅ **Enhanced Yield** – Earn volatility farming rewards at a **2x leveraged rate**. #### For Stable-Yield Farmers (Lenders): ✅ **Stable Yield** – Earn consistent returns by supplying the paired asset. ✅ **Dynamic Interest Rates** – Higher demand means increased interest rates and better returns. ✅ **No Impermanent Loss** – Unlike LPs, lenders are not exposed to market fluctuations. # Self-Lending DCLP Pods ### Self-Lending Pods: Unlocking Instant Liquidity Self-Lending Pods are a specialized variation of LVF Pods that enable users to **borrow from themselves** to create leveraged positions within the Peapods protocol. This innovation significantly reduces the barriers to liquidity formation and ensures a more efficient, self-sustaining lending market. ### **Proof-of-Demand (POD) Mechanism** Self-Lending Pods utilize a **Proof-of-Demand (POD) system**, where users borrow the required amount directly from the lending pool, setting the utilization rate to **100% immediately**. This system ensures instant demand for paired assets, reducing liquidity fragmentation and eliminating the need for external liquidity incentives.
### **Dynamic Interest Rates** Interest rates in Self-Lending Pods dynamically adjust based on utilization: * When utilization is high, **interest rates increase**, attracting external lenders who want to earn yield. * As new liquidity enters the pool, **interest rates decrease**, ensuring borrowers can efficiently access capital without excessive costs. This adaptive rate mechanism ensures sustainable market conditions for both Farmers and Lenders while maintaining capital efficiency.
*** ### Benefits of Self-Lending Pods #### For Volatility Farmers: ✅ **Instant Market Creation** – Borrow from yourself to create an LVF position without waiting for external lenders. ✅ **Optimized Yield Farming** – Automatically access leverage while keeping interest rates dynamic and fair. ✅ **Reduced Borrowing Friction** – Avoid delays and inefficiencies associated with fragmented liquidity pools. **✅ Efficient Liquidity** – Self-Lending Pods are designed to only incentivise supply from external lenders down to near-term depth requirements which prevent Pods from borrowing and thus paying for otherwise idle and unrequired liquidity depth. #### For Stable-Yield Farmers (Lenders): ✅ **Guaranteed Demand** – Self-lending mechanisms ensure utilization, providing a constant opportunity for yield.\ ✅ **Efficient Rate Discovery** – Interest rates dynamically adjust to reflect real-time market demand.\ ✅ **No External Incentives Required** – A sustainable lending system without the need for token emissions or artificial rewards. Earn in exactly the same token you lend out. # How Self-Lending Pods are Created ### How Self-Lending Pods Are Created Self-Lending Pods enable instant liquidity provisioning without requiring external lenders upfront. This process involves a **structured multi-step pathway** to efficiently bootstrap a new Pod: 1. **Flashloan Initiation (L1)** – The user initiates a flashloan to borrow the real PairingAsset. 2. **Supplying Liquidity (L2)** – The borrowed PairingAsset is supplied to the lending pool, generating a supply receipt. 3. **Adding to LP (L3)** – The supply receipt is then combined with the original asset to form an LP position. 4. **Collateralization (L5)** – The LP position is deposited as collateral within the Lending contract. 5. **Borrowing Back (L6)** – The user borrows back the PairingAsset using the LP collateral. 6. **Flashloan Repayment (L7)** – The borrowed PairingAsset is used to repay the original flashloan, completing the cycle.
# Self-Lending Pods Example Below you will find an example of how a Self-Lending DCLP Pod can offer mutually beneficial outcomes for both lenders and for borrowers. #### Key Info: * **90% of Interest** from the borrower goes to lenders. * **10%** goes to the protocol. *** #### Scenario Breakdown: **User A (Borrower):** * Borrows **$5,000** to farm with **$10,000**. * Earns **50% APR** on farming = **$2,500/year**. **User B (Lender):** * Lends **$1,000**. * Earns **49.5% APR** = **$495/year**. #### Key Points: * **User A pays 55% APR** on the $5,000 loan = **$2,750/year**. * **User A gets 90% of that interest back** because they’re also a lender. * **User A’s net cost**: Pays **$770/year** (including **$275** to the protocol and **$495** to User B). * **User A’s net profit**: **$1,730/year**. * **User A’s effective APR**: **34.6%**. #### Why It Works: * **User A** earns 50% APR on **$10,000** but only pay interest on the borrowed **$5,000**. * **User B** earns **50% APR** on their $1,000 loan.\
# Meta Vaults ### Introduction Meta-Vaults (pVaults) are specialized vaults where users deposit assets, which are then distributed to LVF Pods based on **governance allocation** and **interest rate optimization**. This ensures liquidity is deployed efficiently to maximize yield while reducing idle capital. vlPEAS vote to determine which Pods can access the Meta Vault and more speficially, what the maximum allocation of funds from the Meta Vault (in % terms) can be. *** ### How Meta-Vaults Work Meta-Vaults dynamically allocate liquidity based on two factors: 1. **vlPEAS Governance Allocation** – vlPEAS holders vote on how liquidity is distributed among Pods. 2. **Interest Rate Optimization** – Funds flow to Pods offering the most competitive lending rates. This automated system allows users to passively earn yield without the need for manual rebalancing.

An example of how MetaVaults allocations work.

*** ### Benefits of Meta-Vaults ✅ **Passive Yield** – Deposit once and let the vault allocate capital efficiently.\ ✅ **Diversified Risk** – Exposure is spread across multiple Pods, reducing concentration risk.\ ✅ **Optimized Returns** – Governance ensures liquidity is only directed to approved Pods, in a portion of Meta Vault exposure deemed safe by the vlPEAS voters.\ ✅ **Smart Allocation** – Liquidity is managed dynamically to avoid excessive exposure to high-risk Pods. *** ### The Role of Meta-Vaults in Peapods Finance Meta-Vaults streamline liquidity allocation, making LVF lending **accessible, efficient, and automated**. By leveraging governance-driven distribution, they ensure that capital flows smoothly across the Peapods ecosystem. # pOHM: The Pod Amplifier OHM is an unpegged, backed smart money that is encouraged to stay within a moving price range by adjusting its token supply based on market demand via a model known as ‘Range Bound Stability’ (RBS). It increases and sells supply in high demand and decreases it in low demand using buybacks funded by treasury reserves. This makes it a good choice for liquidity providers (LPs) in paired assets, offering reasonable stability with more volatility and growth than pegged stablecoins like DAI.

You can see below how the RBS model influences the performance of OHM over the past 12 months, showing tight price ranges, paired with a slow but steady appreciation in price floor.

Whilst OHM is an interesting choice for LP pairing, pOHM is even better since it is a Green Arrow Pod of OHM. This means it will appreciate vs OHM as a result of any (un)wrap fees. Additionally, the more assets it is paired against, the more potential it has for volatility. This directly translates to more arbitrage volume and more (un)wrap fees which leads to pOHM value increasing against OHM.\ \ pOHM pairing offers several advantages over a standard DAI pairing: 1. More exposure to your paired asset (pOHM value grows against OHM). 2. OHM's price has historically increased guided by the RBS model, which means pOHM price is appreciating against an appreciating asset. 3. Decreased Impermanent Loss (IL) as pOHM is a value accruing pTKN. 4. Increased volatility as a result of OHM’s floating peg means more (un)wrap fees, meaning more $PEAS rewards and burns. Further Q\&A about OHM can be found in the Olympus [Discord](https://discord-invite.olympusdao.finance/). # Pods https\://peapods.finance ## What are Pods? Pods are wrapped assets which consist of one or multiple underlying assets (TKN). A Pod can take the form of an index by [wrapping](#wrapping) multiple assets, or a synthetic version of a singular asset. All Pods are backed 1:1 by the underlying assets at the time of creation. This ratio will never decrease, however, it can increase if a Pod includes a pTKN burn fee (see [Protocol Fees](/pods-2/fees)). Pods are represented by vault shares, and receipt (pTKN) holders can [unwrap](#unwrapping) their assets at any time to retrieve a share of the underlying assets equal to their share of the relevant Pod at any time.
## Multi-Asset Pods All multi-asset Pods on Peapods have a set weight per asset that make up the Pod when created. These Pods do not depend on the market value of the tokens and anyone can create them at any time. ## Decentralized & Trustless In contrast to conventional and certain crypto methodologies which function off a more centralized asset management style of structure, our framework is entirely decentralized which means that there is no central management from the team or any individual at any stage after a Pod has been launched. Investors can engage autonomously and, by becoming a fund liquidity provider, earn fees based on asset volatility. # Interacting with Pods ## Creating a Pod Anyone can create a Pod, and there are no protocol fees for Pod creation. All subsequent wrap and unwrap transactions for a Pod will be subject to predefined fees which are set by the Pod creator at the time of creation. To learn how to create your own Pod, see [*How to create a Pod*](/how-to-guides/how-to-create-a-pod)*.* ## Wrapping Wrapping is the process of minting new Pod tokens by depositing collateral to invest in the Pod. At the time of wrapping, the Pod is immediately rebalanced from the provided collateral ensuring the Pod is 100% collateralized at all times while Pod tokens are minted to the user's wallet. To learn how to wrap an asset, see [*How to wrap an asset*](/flash-loans/how-to-wrap-an-asset)*.* ## Unwrapping Unwrapping is the process of removing Pod tokens from circulation and, in turn, removing collateral backing the Pod. Anyone with Pod tokens (pTKN) can unwrap at any time, or can choose to trade their Pod funds against any liquid market of the pod tokens themselves. To learn how to unwrap an asset, see [*How to unwrap an asset*](/flash-loans/how-to-unwrap-an-asset)*.* ## LP & Stake to Earn LPing is the process of adding liquidity to the incentivized Pod's liquidity pool, with a 1:1 ratio of pTKN and the pre-defined paired asset. Users who provide LP can then stake this LP position to earn a portion of all fees accrued by the Pod. The specific portion of fees earned by LPs is defined by the Pod creator at the time of inception and can be observed when viewing a Pod on [our website](https://peapods.finance/app). To learn how to LP & Stake, see [*How to LP & Stake*](/flash-loans/how-to-lp-and-stake)*.* ## Pod Verification Pods can be created by any user and are made up of any combination of assets and weights they desire. The process of verification allows us to provide some extra validation that we have done due diligence and informally "signed off" on this Pod being considered safe as far as we can tell. Obviously we can't control the broader market dynamics nor can we completely identify the safety of decentralized assets in general, but if we verify a fund, potential investors can be sure we've conducted a minimal amount of due diligence and deem it safe. # Fees Detailed information regarding fees collected by the protocol During the creation of a Pod, the creator can customize the Pod's fees. These adjustments will alter how the specific Pod manages fees and distributes rewards.\ \ There are five (5) key Pod Fees at pod inception, these are: 1. Wrap Fee % 2. Unwrap Fee % 3. Add Partner Fee Share? * Partner Fee Share % (max 5%) * Fee Share Address 4. pTKN Burn % (max 50%) 5. Add AMM Fees * AMM Buy Fee % * AMM Sell Fee % Generally speaking, higher Pod fees mean a higher amount of tokens burned and rewards distributed per arbitrage, however, this can also lower the volume of arbitrage opportunities as the difference in asset prices will need to be higher in order for the arbitrageur to accommodate the higher Pod fees and make a profit from the arbitrage. Inversely, lower Pod fees means a lower amount amount of tokens burned and rewards distributed per arbitrage, however, this can also raise the volume of arbitrage opportunities as the difference in asset prices can be smaller for the arbitrageur to take advantage. It is recommended that due diligence is performed on the asset(s) being used to create the Pod and select fees based on the volatility of the underlying asset(s). ### Fee Options Explained {% hint style="info" %} * By default, a Pod will not show to the general public in the UI with Partner Fee Share enabled until it meets a minimum threshold TVL proportional to the fee share. * The combined value of Partner Fee Share % plus pTKN burn % cannot exceed 50%. * Partner Fee Share % can be reduced or disabled after a Pod has been created. The Fee Share % can never be increased, and all other fees cannot be adjusted once a Pod has been created. {% endhint %} Detailed information about each Pod fee option are as follows:
FeeDescription
Wrap FeeThe % of Pod tokens (pTKN) collected as fees for wrapping assets to the Pod.
Unwrap FeeThe % of Pod tokens (pTKN) collected as fees for unwrapping assets from the Pod.
Burn FeeThe % of total fees allocated to the burning of the Pod token (pTKN), with a maximum of 45%.
AMM Buy/Sell FeeThe % of fees applied to the buys & sells of the Pod token (pTKN) done directly via Uniswap.
Partner FeeA % of total fees (up to 5%) that are distributed as Pod tokens (pTKN) to a specified wallet allocated by the creator of the Pod.
# Fee Distribution With each wrap and unwrap fee collected from Pod usage, burn fees and partner fees are subtracted from the total as priority to burn the set % of pTKN, along with distributing the designated % of pTKNs to the specified partner. The remainder of the fees are converted and used to market buy PEAS. Of the market bought PEAS, 90% of the PEAS are distributed to liquidity providers of the Pod where the fees originated from, with the final 10% being burned and taken out of circulation forever. This can be described with the following calculation: ``` X = Total Fees * Burn Fee % Y = Total Fees * Partner Fee % Z = Total Fees - (X + Y) X = amount of pTKNs burned Y = amount of pTKNS distributed to partner wallet (if applicable) Z = amount used to accrue Treasury (5%) and market buy $PEAS (95%)* *The 95% is split as per below; 90% rewarded to Pod LPs 5% burned, locking in net buy pressure on PEAS ```
# Pod Arbitrage Example of pod arbitrage Below is an example of how the process of arbitraging works in relation to a Pod token (pTKN) and it's underlying asset. This example will be using the PEAS token, along with the PEAS index Pod (pPEAS) that only contains the PEAS token. For this example, we will assume that the price of PEAS has been rapidly increasing due to sudden buy pressure and is worth now $100 USD, however, the price of the PEA index Pod (pPEAS) has not yet caught up and remains at $95 USD. As there is a \~5% difference between PEAS and the Pod token - pPEAS, a user could arbitrage the PEAS token vs the pPEAS token by executing the following steps: * Buy pPEAS via Uniswap * Unwrap the pPEAS tokens to PEAS for a small fee * Sell the unwrapped PEAS on Uniswap to make a profit The inverse scenario can also occur where the price of pPEAS is greater than the price of PEAS. A user could: * Buy PEAS via Uniswap * Wrap PEAS into pPEAS tokens for a small fee * Sell pPEAS tokens via Uniswap make a profit In both scenarios, everyone wins. * The arbitrageur makes a profit * pPEAS collected as fees from wrapping or unwrapping are burned, which increases the overall value of pPEAS to the benefit of pPEAS holders * 5% of the remaining fees are kept aside as the Pod paired asset and used to accrue a Treasury which will be used to provide revenue to PEAS * 5% is used to market buy PEAS and burn them burned, again to the benefit of all holders with supply reduction * 90% of the remainder is used to market buy PEAS and distributed as rewards to the staked liquidity providers of the pPEAS index Pod\ \ With more Pods being created and more liquidity being provided to each Pod, these arbitrage opportunities grow exponentially and will be taken advantage of by users and automated MEV bots to the benefit of everyone in the Peapods ecosystem.
# Pod Liquidity A successful Pod requires liquidity so that [arbitrageurs](/pods-2/pod-arbitrage) can trade the Pod against the underlying asset. An ideal Pod is one with deep liquidity and highly volatile underlying assets for both Pod assets liquidity pairs ([see pOHM: The Pod amplifier](/pohm-the-pod-amplifier)). In order to incentivize liquidity for a Pod, the protocol allocates up to 90% of Pod fees towards rewarding LPs. LPs are incentivized with PEAS tokens. These tokens are bought from the market using the aforementioned fees. # Private Pods Users will be able to create private Pods that only they can LP in order to maximize their yield from their own personal Pod/portfolio fund. This mechanism is available at launch on chain, but we will be publishing more information over time to help other protocols build on top of Peapods to maximize protocol usage. # Flash Loans Cheap, fixed fee flash loans leveraging liquidity from any pod The tokens from any pod can be used to execute a flash loan for any amount for a small fee of 10 DAI at any point in time. It's simple to create a flash loan programmatically by implementing a small interface on a receiving contract to use the funds and return them all in the same block. ## Fees Anywhere you execute `flash` make sure you approve 10 DAI against the pod token you're executing a flash loan against on this wallet/contract which will be transferred to the pod contract. This DAI is used to buy [PEAS](/peas-tokenomics) and paid to LPs for this pod. ## Execute Flash Loan All pods implement the following interface you can call from your smart contract to borrow liquidity from the pod. 
/**
 * @notice execute a flash loan from an index fund contract
 * @param recipient, address of the wallet/contract to receive borrowed funds
 * @param token, token in the index fund to borrow
 * @param amount, amount of tokens to borrow
 * @param data, any arbitrary data to send to the callback, use abi.encode()
 */
function flash(
  address recipient,
  address token,
  uint256 amount,
  bytes calldata data
) external;
## Flash Loan Receiver Interface Implement the following interface from your receiver to execute a flash loan. Just make sure to return any borrowed funds in the callback and do whatever you need! 
/**
 * @notice callback logic for a receiver to use borrowed funds from a flash loan 
 * @param data, arbitrary data to use in the callback, use abi.decode()
 */
interface IFlashLoanRecipient {
  function callback(bytes calldata data) external;
}
# How to wrap an asset https\://peapods.finance/app/wrap To wrap TKNs to pTKNs * Select **Wrap** from the navigation menu and select the Pod you wish to wrap tokens for from the drop down menu. * Select the token and amount you wish to wrap, be it ETH or one of the tokens inside the Pod, and enter the amount of tokens to be wrapped
* Connect your wallet, and select **Wrap** to wrap the specified amount of tokens for the chosen Pod. You will receive the selected index pod tokens back to your wallet which you can the use to LP & Earn, trade against the Pod on Uniswap for arbitrage opportunities, or unwrap if needed. {% hint style="warning" %} Wrapping directly with ETH attempts to swap each asset in the Pods from a Uniswap V2 pool. If the pool doesn't exist or price impact (slippage) of the swap is too high, this transaction might not succeed. In that case you would need to acquire the individual assets and wrap using the assets directly (i.e. not ETH). {% endhint %} # How to unwrap an asset https\://peapods.finance/app/unwrap To unwrap pTKNs back to TKNs: * Select **Unwrap** from the navigation menu and select the pod in which you wish to unwrap tokens for from the drop down menu. * Connect your wallet and enter the amount of pTKNs you wish to unwrap. If the pod is unweighted, enter the asset withdraw distribution for each token to be unwrapped.
* Select **Unwrap** to receive unwrapped TKNs back to your wallet based on the distribution settings entered. # How to LP & Stake To provide liquidity and stake into a pod: * Select **LP & Stake** from the navigation bar and select the pod you wish to provide liquidity for from the drop down menu * Enter the amount of pTKNs you wish to stake liquidity for. If you enter an amount of pTKN to stake, the amount of DAI tokens needed to stake will automatically populate, and vice versa, if you enter an amount of DAI tokens you wish to stake, the amount of pTKNs needed to stake will automatically populate.
It is HIGHLY recommended that the **Stake Liquidity** checkbox remained checked so that your liquidity will be staked and earning [PEAS](/peas-tokenomics) yield automatically. Only uncheck this box if you are an advanced user to manually manage your liquidity separately.
* Once your information is entered correct, select **Provide LP & Stake** and you will receive staked liquidity tokens (spTKN) for the selected pod and will begin earning rewards immediately.