Economics

This page explains how Moono Protocol’s economic model works, including all fees, interest rates, and how costs are calculated for borrowers and earnings for liquidity providers.

All values described here are fetched from the current mainnet on-chain configuration.

Last updated

Configuration last changed: 2026-05-23. Values are synced automatically from on-chain data at build time.

Overview of Costs

When a borrower takes a loan, the total cost consists of several components:

Component	Description
LP Interest	Interest paid to liquidity providers, determined by tick rates and loan duration
Shared Interest	Additional protocol-wide interest surcharge distributed to all participating ticks
Protocol Fee	Fee charged by the protocol for each launch
Migration Reserve	SOL reserved for potential DEX migration
Launch Overhead	Refundable overhead to cover transaction costs

Loan Parameters

Parameter	Value
Minimum loan amount	0.1 SOL
Maximum loan amount	2500 SOL
Minimum loan duration	1 hour
Maximum loan duration	336 hours

Protocol Fee

A fee is charged on every loan:

Protocol Fee = 0.01 SOL

This fee goes to the protocol treasury.

Migration Reserve

A portion of the loan is reserved to cover the cost of potential token migration to a DEX (when the bonding curve completes on pump.fun):

Migration Reserve = (min(loan_amount, 85 SOL) × 1 SOL) / 85 SOL

Migration Reserve Examples

Loan Amount	Migration Reserve
0.1 SOL	0.0012 SOL
0.5 SOL	0.0059 SOL
1 SOL	0.0118 SOL
5 SOL	0.0588 SOL
10 SOL	0.1176 SOL

The migration reserve is used to provide liquidity on a DEX if the token’s bonding curve completes. If the loan is repaid before migration happens, the reserve is returned as part of the settlement.

Launch Overhead (Refundable)

A small refundable overhead is charged to cover Solana transaction fees and rent:

Launch Overhead = 0.05 SOL

This amount is returned to the borrower when the loan is closed (repaid or liquidated).

Interest Model

Moono Protocol uses a tiered liquidity model with 1,024 ticks (risk tiers). Each tick has its own interest rate, and loans are filled from the lowest tick upward.

How Ticks Work

• There are 1,024 ticks, indexed from 0 to 1,023
• Each tick represents a pool of liquidity at a specific interest rate
• Lower ticks have lower rates; higher ticks have higher rates
• When a loan is taken, liquidity is consumed starting from tick 0 and moving upward
• LPs choose which tick to deposit into based on their desired risk/reward

Per-Tick Interest Rate

Each tick has an hourly rate expressed in parts per million (ppm):

tick_hourly_rate_ppm = min(2048, 2 + tick_index × 2)

Tick Index	Hourly Rate (ppm)	Hourly Rate (%)	Rate for 1 SOL per hour
0	2	0.0002%	0.000000 SOL
10	22	0.0022%	0.000000 SOL
50	102	0.0102%	0.000000 SOL
100	202	0.0202%	0.000000 SOL
250	502	0.0502%	0.000001 SOL
500	1002	0.1002%	0.000001 SOL
1023 (max)	2048	0.2048%	0.000002 SOL

Per-Tick LP Interest Calculation

For each tick that contributes to funding a loan:

tick_lp_interest = (tick_borrow_amount × tick_hourly_rate_ppm × loan_duration_hours) / 1,000,000

Example: A loan borrows 0.5 SOL from tick 100 for 12 hours:

tick_lp_interest = (0.5 × 202 × 12) / 1,000,000
                 = 1212 / 1,000,000
                 = 0.001212 SOL

Shared Interest (Protocol Surcharge)

In addition to per-tick LP interest, there is a shared interest component — a global surcharge that is distributed proportionally across all ticks participating in the loan. The formula uses a linear interpolation:

shared_ppm = hpppm_min × interval + (fpppm_min - hpppm_min × interval_min) × (interval_max - interval) / (interval_max - interval_min)

With current mainnet parameters:

hpppm_min = 2
fpppm_min = 50,000
interval_min = 1 hour
interval_max = 720 hours

shared_ppm = 2 × interval + (50,000 - 2 × 1) × (720 - interval) / (720 - 1)

Then:

shared_interest = (loan_amount × shared_ppm) / 1,000,000

Shared Interest by Duration

Duration	shared_ppm	Shared Interest (per 1 SOL)
1 hour	50,000	0.0500 SOL
2 hours	49,932	0.0499 SOL
6 hours	49,662	0.0497 SOL
12 hours	49,257	0.0493 SOL
24 hours	48,446	0.0484 SOL

Note

The shared interest decreases slightly with longer durations because the linear interpolation formula is designed so that shorter loans pay a higher flat-rate surcharge. This is intentional — short-duration loans benefit more from the instant liquidity, so they carry a higher shared cost.

Total Interest

The total interest for a loan is the sum of all per-tick LP interest plus the shared interest:

total_interest = Σ(tick_lp_interest for each tick) + shared_interest

The shared interest is distributed to each participating tick proportionally to how much it contributed:

tick_shared_part = shared_interest × (tick_borrow_amount / total_loan_amount)
tick_total_interest = tick_lp_interest + tick_shared_part

Complete Cost Examples

Example 1: Small Loan — 0.5 SOL for 6 hours

Assuming the loan is fully funded from tick 0:

Component	Calculation	Amount
Protocol Fee	Fixed	0.0100 SOL
Migration Reserve	0.5 × 1 / 85	0.0059 SOL
Launch Overhead	Fixed (refundable)	0.0625 SOL
LP Interest (tick 0)	0.5 × 2 × 6 / 1,000,000	0.0000 SOL
Shared Interest	0.5 × 49,662 / 1,000,000	0.0248 SOL
Total Cost		0.1032 SOL
Non-refundable Cost		0.0407 SOL

Example 2: Medium Loan — 2 SOL for 12 hours

Assuming the loan is funded from ticks 0–50 evenly:

Component	Calculation	Amount
Protocol Fee	Fixed	0.0100 SOL
Migration Reserve	2 × 1 / 85	0.0235 SOL
Launch Overhead	Fixed (refundable)	0.1000 SOL
LP Interest (avg tick ~25)	2 × 52 × 12 / 1,000,000	0.0012 SOL
Shared Interest	2 × 49,257 / 1,000,000	0.0985 SOL
Total Cost		0.2333 SOL
Non-refundable Cost		0.1333 SOL

Example 3: Maximum Loan — 10 SOL for 24 hours

Assuming the loan is funded from ticks 0–200:

Component	Calculation	Amount
Protocol Fee	Fixed	0.0100 SOL
Migration Reserve	10 × 1 / 85	0.1176 SOL
Launch Overhead	Fixed (refundable)	0.3000 SOL
LP Interest (avg tick ~100)	10 × 202 × 24 / 1,000,000	0.0485 SOL
Shared Interest	10 × 48,446 / 1,000,000	0.4845 SOL
Total Cost		0.9606 SOL
Non-refundable Cost		0.6606 SOL

Caution

The actual LP interest depends on which ticks have available liquidity at the time of borrowing. If lower ticks are depleted, the loan will be filled from higher ticks with higher interest rates, increasing the cost.

What Happens to Each Fee Component

Component	Destination
LP Interest	Distributed to the specific LPs whose ticks funded the loan
Shared Interest	Distributed proportionally across all participating ticks
Protocol Fee	Protocol treasury
Migration Reserve	Held in escrow; used for DEX migration or returned on repayment
Launch Overhead	Returned to borrower on loan closure

Liquidation Economics

A loan can be liquidated by the borrower (at any time) or by the protocol admin (after expiration). On liquidation:

1. All initial-buy collateral is sold (on the pump.fun bonding curve or on PumpSwap, depending on the curve’s state)
2. The SOL proceeds are used to repay the borrowed amount to the liquidity pool
3. The migration reserve covers any shortfall if the token price dropped
4. Any surplus (proceeds beyond the borrowed amount) is split three ways — see below

Liquidation Surplus Split

Surplus from a profitable liquidation is divided into LP, platform, and borrower shares according to parts-per-million coefficients stored on the launch configuration. The current mainnet values are:

Share	Coefficient (ppm)	Percent of surplus
LP	0	0.00%
Platform	0	0.00%
Borrower	1,000,000	100.00%

The shares are snapshotted onto the loan account at launch_0 time — once a loan is open, the split is fixed for its lifetime even if admin reconfigures the launch configuration later.

Formulae:

surplus            = sale_proceeds - quote_borrowed                 (only when positive)
surplus_lp         = surplus × surplus_share_lp_ppm / 1_000_000     → routed to per-tick LP interest
surplus_platform   = surplus × surplus_share_platform_ppm / 1_000_000 → routed to quote_vault.protocol_fees
surplus_borrower   = surplus - surplus_lp - surplus_platform        → paid to borrower's WSOL ATA

Liquidation Scenarios

Scenario A: Token price increased (profitable liquidation)

• Collateral is worth more than the borrowed amount
• LP is fully repaid plus its share of the surplus (extra yield on top of interest)
• Platform receives its share of the surplus
• Borrower receives the remainder of the surplus

Scenario B: Token price decreased, but within reserve

• Collateral sale doesn’t fully cover the loan
• Migration reserve covers the shortfall
• LP is fully repaid; no surplus to split
• Borrower may receive a small refund (unused reserve) or nothing

Scenario C: Token price crashed below reserve coverage

• Collateral + migration reserve don’t cover the full loan
• LP receives a partial repayment (loss)
• Borrower receives nothing back; no surplus to split

Note

The migration reserve acts as a buffer to protect LPs from moderate price declines in the launched token. The surplus split applies only above the borrowed amount — LP and platform never take from the borrower’s principal recovery, only from upside.

LP Earnings Model

LP earnings come from three sources:

1. Direct LP interest — earned based on the tick rate and loan duration (paid upfront at launch_0)
2. Shared interest — the protocol surcharge, distributed proportionally
3. Liquidation surplus share — when a loan is liquidated above the borrowed amount, 0.00% of the surplus accrues to the ticks that funded the loan (see Liquidation Surplus Split)

Share Valuation

When you open an LP position, your deposit is converted to shares at the current share price:

shares = deposit_amount × tick_total_shares / (tick_balance + tick_borrowed)

When you withdraw, your shares are converted back to SOL:

withdrawal_amount = shares × (tick_balance + tick_borrowed) / tick_total_shares

As interest accrues from repaid loans, the ratio (tick_balance + tick_borrowed) / tick_total_shares increases, meaning each share is worth more SOL. This is how LPs earn — the value of their shares grows over time as borrowers repay with interest.

LP Withdrawal Constraints

You can only withdraw SOL that is not currently lent out:

max_withdrawable_shares = (your_shares × tick_balance) / (tick_balance + tick_borrowed)

If all liquidity in your tick is currently borrowed, you must wait until some loans are repaid or liquidated before you can withdraw.

Configuration Parameters Reference

Global Protocol Config

Parameter	Value	Description
hpppm_min	2	Minimum hourly rate in ppm per tick
hpppm_max	2048	Maximum hourly rate in ppm (rate cap)
hpppm_step	2	Rate increment per tick index
fpppm_min	50,000	Minimum fixed ppm for shared interest calculation
fpppm_max	70,000	Maximum fixed ppm (reserved for future use)
interval_min	1	Minimum loan duration in hours
interval_max	720	Maximum loan duration in hours (used in formula)
registration_fee	0.01 SOL	One-time user profile registration fee

Pump.fun + WSOL Launch Configuration

Parameter	Value	Description
quote_amount_min	0.1 SOL	Minimum loan amount
quote_amount_max	2500 SOL	Maximum loan amount
loan_interval_min	1 hour	Minimum loan duration
loan_interval_max	336 hours	Maximum loan duration
quote_launch_fixed_cost	0.01 SOL	Protocol fee (fixed component)
quote_launch_ppm_cost	0	Protocol fee (ppm component)
quote_launch_fixed_overhead_refundable	0.05 SOL	Refundable launch overhead
quote_migration_fixed_cost	1 SOL	Migration reserve (fixed component)
quote_migration_ppm_cost	0	Migration reserve (ppm component)
quote_migration_threshold	85 SOL	Migration threshold
surplus_share_lp_ppm	0 (0.00%)	LP share of liquidation surplus
surplus_share_platform_ppm	0 (0.00%)	Platform share of liquidation surplus