The rules behind every market

Borro lends stock tokens, and a stock can gap. So every market on the desk is built on the same few rules. They are short enough to list.

Isolation, per stock. Each stock has its own vault and its own two Morpho Blue markets. A lender in NVDA is exposed to NVDA shorts and nothing else. Bad debt in one market is written off against that market's lenders alone and never reaches another stock. The USDG vault is the one exception, by design: it lends into every stock's USDG market, within a cap for each, so a USDG lender is spread across the desk.

Caps from exit depth. A cap is a promise that a liquidation can clear. So each cap comes from the live depth of the stock's own Uniswap pool: the largest sale, and the largest purchase, that moves the price less than 2%. The keeper measures it every hour and publishes it. Caps come down when a pool thins and go up only after a three-day wait. The first measurement found every pool shallower than the caps set by hand at launch, which is why this job exists.

Prices from Chainlink, shares from the vault. Stock prices come from Chainlink's feeds for the Robinhood tokens. Vault shares posted as collateral are priced by a Morpho Chainlink oracle set up for that vault: what a share redeems for, times the stock's feed price. No Borro price and no pool price ever enters a limit. One thing to know: Morpho's oracle does not check how old a price is. Over a weekend the last print holds, and the first print on Monday can close many positions at once.

A liquidator, and a weekend band. Borro's keeper checks every borrower every 15 seconds and closes anything past its limit, for the same bonus anyone can earn. While the feeds pause, it publishes a weekend price and a 95% band for each stock, from Hyperliquid and the chain's pools, and the app sizes new shorts against the top of the band and values posted stock at the bottom. The Weekend Desk sells cover against the Monday gap, paid from a pool that holds the full payout from the moment a cover is bought.

Three days in public. The contracts are owned by a 2-of-3 multi-signature wallet. Anything that could hurt a lender, such as raising a fee, lending to a new market or raising a cap, is submitted on chain and waits three days before it can take effect. Changing where a short is sold waits two days. A new $BORRO claim list waits two hours, and a guardian can throw it out. The owner cannot move a position or take a lender's stock. A vault's fee can never pass 50% of interest, and the opening fee on a short can never pass 0.30%.

The tail, honestly. Morpho Blue and Morpho Vault V2 hold the deposits, and both have been audited many times by outside firms. Borro's own contracts, the logic around them, have had internal adversarial reviews and 721 contract tests across 33 suites, and they have not been audited by an outside firm yet. Borro has applied to the Arbitrum Security Program to get that audit done. Until then, caps stay small on purpose. Every contract is verified on Blockscout and the source is public at github.com/Borro-Markets/contracts. And in a gap, if a price moves faster than a position can be closed, a shorter can owe more than they hold, and that shortfall falls on the lenders in that market. It can happen. The rules above are there to keep it rare and small, not to pretend it away.