# Nashed Money Market Liquidation-Free Borrow/Lending **Welcome the Nashed, the first Liquidation free Money Market!** This is a product of [Itos Finance](https://docs.itos.fi/), explore there to learn more about the underlying tech and others in our family of products. ## What does liquidation free mean? Exactly that.\ No substitutions, no tokens, no gimmicks. Borrow/Lend and then lock in your position with perpetual insurance. As long as your original position is solvent, no matter what the utilization goes to, we make sure you can come back to your portfolio and it'll still be there like you left it. Nothing is free in real finance and this is no exception. The perpetual insurance charges a funding rate. Fortunately, in most situations that funding rate is on the order of borrow/lending rates so it is often very affordable and sometimes even pays for itself. Learn more here: [Liquidation-Free](/overview/liquidation-free) ## How do I use it? It's not any different than the money markets you might be used to, but you'll notice there are a few more features and LOTS more tokens you can use as collateral. * **Borrow/Lend** just like you're used to. * **Transmute**: You can convert *Isolated* token collaterals into cross-margining ones with Itos Takers. * **Portfolio Lock**: Guarantee your entire portfolio against liquidations. Charges an insurance fee where 90% of the cost only applies if you actually need it. If you never use it, it stays extremely cheap. * **Pair Secure**: Guarantee a single borrow with a single collateral deposit. Cheaper alternative to Portfolio Locking. Learn more at: [How to Use](/overview/how-to-use) ## How does it work? This is an Itos protocol and it uses the Itos Convex primitive to provide affordable on-demand insurance. The Itos Taker acts like a synthetic perpetual option, which only pays the majority of its fees if it's actually used. We use the Itos Portfolio Manager to combine the borrow and lending done on Nashed with Itos Takers to guarantee they stay liquidation free. Learn more here: [#how-does-it-work](#how-does-it-work "mention") # How to Use ## The Basics There are **two categories of tokens: *****Blue-Chips and Isolated**.* Blue-chip tokens have full cross-collateralization, and isolated tokens are... well... isolated. However, that doesn't stop us from borrowing/lending **isolated** tokens as if they're cross-collateralized. Yep, you can borrow anything and everything while lending anything through the power of **transmutation**. **Without transmutation**, you can still deposit any token to earn the lending rate. And you can borrow blue-chip tokens with your blue-chip collateral.

You *can* borrow isolated tokens with the same isolated token. This might sound weird at first, because why would you borrow PEPE and lend it at the same time, until you learn that Nashed works with the Itos PM. Therefore it can use PEPE LPs, locked PEPE, and other PEPE derivatives as collateral for borrowing plain old PEPE. Basically you're liquid-staking... everything. You can find more about the health factor rules in the Itos [Whitepaper](https://docs.itos.fi/more-documentation/whitepaper). To keep it simple, blue-chip borrows against blue-chip collateral is normal, there is a visible health factor you can track. Isolated tokens borrow against positions in that same token. ## Transmutation This is where the real power of Nashed comes in. When you go to lend a token, that supplied token can be transmuted into any other token. So a blue-chip can be transmuted into an Isolated if you want to borrow a specific isolated token. And an isolated token can be transmuted into a blue-chip like USDC so you can add to your blue-chip collateral and borrow blue-chips freely. Now if you have piles and piles of some random token, you can put it to use and get some capital efficiency out of it. If you have a specific token you want to short, but nowhere lends it, check Nashed, we probably will!

## Pairwise Secure When you borrow there is also an advanced feature which is a secure borrow. When secured, there is no fear of liquidation. Instead you deposit collateral that is specific to this borrow, and then we open the insurance required to bind these two positions together. Overall your portfolio does not increase its debt, this position cannot be liquidated, and is not affected by your other borrows.

You can choose to securely borrow any token, blue-chip or isolated. ## Portfolio Protection You can also fully secure an entire portfolio. Simply hit the lock button, and be free of all liquidations. We'll let you know the historical funding cost upfront. Remember the cost goes up only if you actually need the portfolio protection (aka it prevented a liquidation).

A locked portfolio can be locked and unlocked at any time. # Liquidation-Free ## Normal Money-Market Liquidations On normal money markets, users borrow tokens by first depositing an amount of greater value in another token as collateral. Money markets require **over-collateralization**. The problem is that token prices fluctuate, when if the value of the borrow climbs too close to the value of the deposit the portfolio is declared **insolvent** and faces **liquidation.** \ \ In a **liquidation**, a percent of the user's collateral is taken by a liquidator, swapped into a percent of the user's borrow, repaid to the protocol, and the liquidator keeps an excess collateral for themselves. All protocols try to balance that excess so it doesn't hurt the portfolio too much, but is still enough to incentivize any would-be liquidators. \ \ This is a painful process because sometimes prices are just spiky, and a liquidated portfolio might have perfectly recovered had no liquidators touched it. Or a user simply didn't respond fast enough to recollateralize their position. Regardless of the sitution, liquidations are almost always painful, which is why Nashed does things differently. ## Nashed Insolvency Nashed portfolios can opt into liquidation insurance. They can either insure an entire portfolio or just a single borrow. When they opt into liquidation insurance, perpetual synthetic options are automatically opened for all positions on any protocols that offer them (for now, just Itos but more like Dopex and Panoptic will come soon). The Nashed interface calculates the correct strikes, finds the cheapest, and locks them in. This can be unlocked at anytime. Now if the portfolio's borrow value goes too high, the options values cover the difference and the entire portfolio remains solvent. There is of course a **cost** to this. The cost is usually the borrow rate minus the lending rate of the lent tokens. What this means is that the lending returns are reduced when one locks their portfolio against insurance. This is why Nashed also allows **pair-wise secures** which reduces costs by avoiding unneeded insurance. A common scenario to use this is with tokens that don't have much utility. For example, if you have DUD tokens that don't do anything and no one is borrowing, you can deposit it, borrow ETH and USDC at 4%, **liquidation-lock** the portfolio for cheap (since no one is lending/borrowing anyways) and ETH/USDC LP to earn LP fees & rewards. Only when the portfolio enters insolvency, does the liquidation-lock become expensive. But despite the cost, it is still cheaper than losing a quarter or more of your portfolio to liquidations. What if someone's borrow increases in value and they just run away with the borrow and leave their collateral behind? That's totally fine! Eventually the insurance will burn through the collateral and that will be given as fees to the Itos liquidity providers. Nashed is never at risk. ## Nashed Re-Solvency Once a **liquidation-locked** portfolio becomes solvent again, the user can do anything as if nothing happened. The liquidation insurance becomes cheap again and the user can decide if they want to unlock or leave it. # How it Works ## Nashed: Itos Producer Nashed is an Itos Producer, meaning it ascribes to the Itos Position Manager's Producer interface and gets to use its cross-margining capabilities. As a smart contract, Nashed is actually incredibly simple. It just issues credit positions and debts positions for lends and borrows respectively, nothing more complicated than that. The secure borrows and the transmute positions are bundle positions. They're combinations with Itos Takers. ## Itos Takers as Liquidation Insurance Itos 2sAMM's Takers are convex positions that pay a funding rate to always trade into the more valuable of the token pair. More details are available in [Automated Market Taking](https://docs.itos.fi/itos-concepts/automated-market-taking). Takers combined with a deposit guarantee a minimum balance in the other token of the Taker's token pair. That minimum balance is the max amount a user can safely borrow without fear of liquidation.

The Total Value of a secure borrow is never below zero

## Itos PM Accounting The Nashed liquidation and solvency rules are actually the Itos PM's rules which are extensive, tested, and well-motivated. (See [Whitepaper](https://docs.itos.fi/more-documentation/whitepaper) for exact details). They ensure that all blue-chip debts and credits are cross-margined while the isolated debts and credits individually solvent. The bundles Nashed uses to create the advanced positions have their token balances netted out which improves capital efficiency as opposed to directly using the PM.