How It Works

Agama has two actors: Alice borrows, Bob lends. Bob can optionally stake his lender receipt in the Stability Pool to earn extra yield in exchange for absorbing liquidations.

Alice, the borrower

Alice holds a tokenised private-credit tranche — say sRESOLV (Resolvi Senior) or jCONDO (Sector Condo Junior). The token is yield-bearing in its own right: holding it accrues real-world interest at a base rate x%. Agama lets her stack on-chain leverage on top of that yield without selling the position.

She can also run positions on multiple markets in parallel. Borrowing on sRESOLV doesn't touch her position on jCONDO — debt is isolated per market, so each market has its own health factor and can be liquidated independently. See Overview → Per-market debt isolation.

Typical loop

Alice's leverage cap is not a protocol-enforced number; it's the mathematical limit implied by the LTV. A Senior tranche has MAX_LTV 75%, so infinite loops at that ceiling converge to ~4× leverage. A Junior tranche caps at 50% LTV (terminal 2×). In practice Alice runs below the cap for a healthier health-factor margin.

Initial position: 1,000,000 sRESOLV (yield-bearing, ~12% APY)
 
Loop 1: deposit 1M    → borrow 500k USDr (50% LTV) → buy 500k sRESOLV via the issuer
Loop 2: deposit 500k  → borrow 250k USDr            → buy 250k sRESOLV
Loop 3: deposit 250k  → borrow 125k USDr            → buy 125k sRESOLV
 
After 3 loops:  1.875M sRESOLV collateral,  0.875M USDr debt
Net APY      =  12% × 1.875  −  10% × 0.875
             =  22.5%        −  8.75%
             =  13.75%

On the stablecoin side. Rayls has no native USDC issuance, so Agama's reserve asset is USDr, the Rayls native dollar stablecoin, 1:1 backed by USDC held in reserve. USDr is economically equivalent to USDC; the wrapping is a network artifact.

On the AmFi side. Tranche tokens are denominated in ABRL (BRL-pegged stablecoin issued by AmFi, 1:1 backed by Brazilian Real bank reserves). AmFi accepts USDC from institutional subscribers and handles the USDC→ABRL conversion on its own platform.

Alice's actual flow. She borrows USDr on Agama, redeems it for USDC at parity, sends USDC to AmFi, receives the tranche tokens, redeposits them as collateral on the matching market. The cross-currency exposure is real: her collateral is BRL-denominated and her debt is USD-denominated, so USD/BRL FX is a structural input to her health factor.

See Interest Rate Model → Looping viability for the loop-by-loop table at different LTV settings, including the Senior 75% ceiling and Junior 50% ceiling.

Bob, the lender

Bob is a crypto user seeking RWA-backed yield. He deposits USDr into the Lending Pool and earns supply APY as borrowers pay interest.

Bob's flow has two steps. Step 1 is the baseline lender position; Step 2 is optional and layers on top.

Step 1. Lend (required)

Bob deposits USDr, receives agYLD, done. agYLD is transferable and composable across Rayls DeFi. See Lending Pool → What is agYLD for the full mechanics.

Step 2. Stake in the Stability Pool (optional)

Bob can take the agYLD he just got in Step 1 and stake it in the Stability Pool to become a Stability Provider.

The Stability Pool takes agYLD, not USDr. That's deliberate: Bob keeps earning supply yield while staked, and is positioned to absorb liquidations for an additional premium. If the Stability Pool accepted USDr directly, Bob would lose the supply APY.

The cooldown trade-off is also deliberate. Letting Bob exit the second he sees trouble would empty the SP exactly when the protocol needs it. So a requestUnstake queues his shares for 7 days, during which they keep working — earning premiums but also still absorbing liquidations. See Stability Pool → Cooldown on unstake for the full mechanics, including the earmark behaviour and the settlement extension.

When Alice gets liquidated

If Alice's health factor on a market falls below 1 and the manager-keeper submits a liquidation before she cures (no on-chain grace period in V1 — the seizure is single-step and atomic):

1. Collateral leaves Alice's vault. Her RWA is held by the asset adapter (e.g. AmFiAdapter), not by the Lending Pool itself. The adapter transfers the RWA tokens directly to the Stability Pool. Her USDr debt is burned. She loses the collateral, but owes nothing.
2. Bob's agYLD stays whole. The Stability Pool immediately repays the Lending Pool's USDr by burning some of its own agYLD. Pure lenders (Step 1 only) are never impacted; their agYLD keeps appreciating as if nothing happened.
3. Staked Bob absorbs, then recovers. Bob's sagYLD represents a claim on the Stability Pool's agYLD pool, which just shrank by the debt amount. For ~15 days the Stability Pool holds RWA tokens instead of agYLD while the Settlement Vault redeems them off-chain with the issuer.
4. Settlement restores the peg. When USDr returns from the redemption (~D+15 for AmFi), it's deposited back into the Lending Pool on the Stability Pool's behalf, which re-mints agYLD for the Stability Pool. The recovered value typically exceeds the debt; the surplus is the liquidation premium, which flows pro-rata to all sagYLD holders, including the Reserve Fund as a co-staker. All participants earn proportionally to their share of sagYLD — there is no privileged slice routed elsewhere.

Net effect: pure lenders are protected in real time; staked lenders take a temporary balance-sheet exposure and earn the bonus as compensation.

Expected Stability Pool yield

Two components:

1. Supply APY via agYLD appreciation, same as a pure lender.
2. Liquidation premium, paid out when borrowers get liquidated and stakers share pro-rata in the seized collateral's recovery value beyond the debt absorbed.

Modelling:

Assume: 3% of outstanding loans liquidated per year,
        5% average liquidation premium captured on those events,
        80% of that premium net of fees reaches Stability Pool stakers.
 
Annual premium to the Stability Pool, expressed as a fraction of the loan book:
  = 3% × 5% × 80%
  = 0.12% × loan_book per year

That premium is split among Stability Pool stakers proportional to their stake. Define the pool's capitalisation ratio:

k  =  SP_capital / loan_book

Per-staker yield boost is 0.12% / k. Per-staker exposure during a single liquidation event also scales with 1 / k (a thinner pool absorbs each event with thinner shoulders). The yield premium and the loss exposure move together; the boost is compensation for concentration risk, not a free lunch.

The drawdown is temporary: the Settlement Vault refills the pool over the ~15-day redemption cycle, and the Reserve Fund covers any shortfall (so principal is generally protected, even if the on-chain sagYLD value dips before settlement).

The base scenario (3% liquidation rate, 5% premium) is conservative. RWA stress events can compress that further on the upside; long calm periods compress it on the downside. Headline: Stability Pool yield ≈ lender APY + premium_stream, where the premium stream scales with liquidation flow and the pool's capitalisation choice.