> For the complete documentation index, see [llms.txt](https://docs.usefarlight.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.usefarlight.com/introduction/design-principles.md). # Eight rules the design must pass The eight constraints that every part of Farlight, from the contracts to the interface, is checked against. Farlight is assembled from the parts of on-chain lending that have already held up under load, and it leaves out the parts that have not. Isolated markets, oracle-agnosticism and a minimal core come from Morpho Blue. Signed offers that settle on-chain come from Blend and the NFTfi family of designs, and the refinancing auction comes from Blend in particular. The eight rules below are the instrument panel every design choice is read against. A choice that fails any one of them does not ship. ## 1. Escrowed collateral, always worth more than the debt Farlight lends only against collateral that is liquid, priced by an oracle, native to the chain and held by the escrow contract. Uncollateralised loans are not made. Off-chain collateral is not accepted. Courts play no part in recovery. If a loan fails, the remedy is a liquidation auction, and any address may start one. ## 2. Price the token in escrow and nothing around it The asset the protocol values is the token that is actually in escrow. Wrappers, derived exchange rates and stand-ins are never priced. In July 2026 Edel Finance lost funds when a wrapper's rate was pushed to 78 times the underlying while the oracle itself kept reporting correctly. This rule on its own would have prevented that loss. ## 3. Exposure stays where it was taken A lender slice is a position in its own right, and every pairing of collateral and loan asset is a separate market configuration. Whatever goes wrong, whether a weak asset, a bad borrower or a poor lending decision, stays with the party that took that risk on. If bad debt ever occurs, the lender who priced the loan carries it and nobody else does. ## 4. Negotiated rates, contractual terms There is no utilisation curve anywhere in the protocol. The borrower sets a ceiling, each lender names a price, and the contract originates wherever the two overlap. Terms are fixed and run from 7 to 90 days, with a refinancing auction when they end, so a lender knows exactly how long their capital is committed and a borrower never faces an abrupt rate change. ## 5. Custody begins at the match and not before Until a match exists, a signed offer is nothing more than a message. Funds move at origination, through `permit`, Permit2 or a prior approval, and at no other moment. Farlight does not hold unmatched lender capital. A lender who chooses to can leave it in a whitelisted Morpho vault, under an allowance that the lender sets. ## 6. An immutable core with a tunable perimeter LoanDesk, the origination contract, is a minimal singleton built along the lines of Morpho Blue, and it has no upgrade path. Every adjustable value (LTV tiers, haircuts, staleness bounds, fee rates, the whitelists of vaults and oracles) sits in PolicyController, a separate contract governed by a timelocked multisig, and each change there emits an event. Repayment, and withdrawal once a loan is repaid, cannot be paused under any circumstances. ## 7. Shaped around Robinhood Chain Robinhood Chain has a single sequencer, equity price feeds that operate 24/5 and carry market-status flags, and Stock Tokens with no transfer restrictions at the token level. The protocol is built to match. It grants a grace period after a sequencer outage and supports forced inclusion from L1. When markets are closed it applies haircuts that depend on the market session. And it enforces eligibility itself, at its own boundary. ## 8. Nothing out of sight Each state change emits an event. The order book is public, and anyone can rebuild it from the signed messages. The loan registry, which the platform calls the Observatory, the risk page, which it calls Telemetry and which shows the live readouts of protocol statistics and parameters in force, oracle status and the governance log are all open to anyone. The contracts, relayer, indexer and keeper bots are open source, with reproducible builds. The full list is in [Transparency commitments](/transparency/commitments.md). --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. 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