PIO
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  • V2
    • PIO V2 Introduction
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Portfolio as Collateral

Last updated 4 months ago

  1. PIO V2 offers users the ability to borrow stablecoins against their collateral using a portfolio of collateralized bilateral derivative positions.

  2. Borrowed stablecoins can be used to engage in DeFi activities.

  3. Portfolio as Collateral makes PIO V2 a DeFi building block, introducing Derivative Portfolio as a primitive that other DeFi protocols can integrate.

  4. Use case example: Flatcoins, hedged by Interest Rate Derivatives (IRDs).

  1. The biggest challenge for a stablecoin is maintaining its stability. PIO's system ensures the stablecoin is always 100% collateralized and protected from risk, even in cases of funding issues or defaults.

  2. How does this work? PIO's edge is that each derivative position is bilateral. This means they are secured against a single party who sets Initial Margin (IM) and Default Fund (DF) parameters high enough to avoid losses on inventory rebalancing if the counterparty defaults.

  3. In case of default, the stablecoin will never be affected. Only the counterparty with off-chain discretionary risk management will face consequences.

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