# 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.

<figure><img src="/files/743R1AOvW7i56wYCGguV" alt=""><figcaption><p>The Total Value of a secure borrow is never below zero</p></figcaption></figure>

## 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.


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.nashed.xyz/overview/how-it-works.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.