Overview

Cho Markets is an isolated lending protocol for Solana. Each market is a separate lending pool with its own loan token, collateral token, oracle, and risk parameters.

Program ID: 5LYM6PdjBQ9Fr6Y3PV5aFBfxVCncup41ZGEQ2q73tm4F

Name

The name Cho is a precise romanization of the Japanese cho, a high-utility signifier for transformation (蟼), transcendence (超), and the summit (頂).

Architecture

┌─────────────────────────────────────────────────────────┐
│                    Cho Markets Program                   │
│  Program ID: 5LYM6PdjBQ9Fr6Y3PV5aFBfxVCncup41ZGEQ2q73tm4F │
├─────────────────────────────────────────────────────────┤
│                                                         │
│  ┌──────────────┐  ┌──────────────┐  ┌──────────────┐  │
│  │    Market    │  │    Market    │  │    Market    │  │
│  │  USDC/SOL    │  │  USDC/PYUSD  │  │  EURC/SOL    │  │
│  │  LLTV: 80%   │  │  LLTV: 90%   │  │  LLTV: 75%   │  │
│  └──────────────┘  └──────────────┘  └──────────────┘  │
│         │                  │                  │         │
│  ┌──────────────┐  ┌──────────────┐  ┌──────────────┐  │
│  │   Position   │  │   Position   │  │   Position   │  │
│  │  (per user)  │  │  (per user)  │  │  (per user)  │  │
│  └──────────────┘  └──────────────┘  └──────────────┘  │
│                                                         │
└─────────────────────────────────────────────────────────┘

Accounts

Market

PDA: ["market", loan_token, collateral_token, collateral_adapter, loan_adapter, irm_id, lltv, nonce]

Position

PDA: ["position", market, user]

ProtocolConfig

PDA: ["protocol_config"]

Governance-controlled allowlists for LLTV values and IRM IDs.

IrmRegistry

PDA: ["irm_registry"]

Governance-controlled registry tracking IrmConfig accounts and enabled IRM IDs.

IrmConfig

PDA: ["irm_config", index_le_bytes]

Parametric interest rate model configuration for custom IRMs.

Liquidation Incentive

Cho Markets uses an LLTV-dependent liquidation incentive formula. Higher LLTV markets have lower liquidation bonuses to protect high-leverage positions.

Formula

incentive = min(1.15, 1 / (1 - 0.3 * (1 - LLTV)))

Incentive by LLTV

This model protects high-LLTV markets from excessive liquidation profits while encouraging liquidations in safer markets.

Instructions

User Operations

Note: IrmConfig is only required in remaining_accounts when the market uses a custom IRM (irm_cache_type = 255). For builtin IRMs (types 0-2), the IrmConfig account is not needed.

Admin/Governance

Interest Rate Models (IRM)

IRM Types

IRMs are identified by their irm_id (Pubkey). Builtin IRMs use canonical PDAs, while custom IRMs use IrmConfig account PDAs.

Custom IRM (Type 255)

When a market uses a custom IRM (irm_cache_type = 255), the IrmConfig account must be passed in remaining_accounts for instructions that accrue interest:

• supply, withdraw, repay, accrueInterest: remaining_accounts[0] = IrmConfig
• borrow, withdrawCollateral, liquidate: remaining_accounts[2] = IrmConfig (after oracle feeds)

For builtin IRMs (types 0-2), no IrmConfig account is needed in remaining_accounts.

AdaptiveCurve Details

Target utilization: 90%
Rate bounds: 0.1% APR (min) to 200% APR (max)
Initial rate_at_target: 4% APR

Two-slope formula:
• Below 90%: APR = 1% + (utilization × 4% / 90%)
  - At 0% util: 1% APR
  - At 90% util: 5% APR
• Above 90%: APR = 5% + ((utilization - 90%) × 10)
  - At 100% util: 105% APR

Rate adjustment: Exponential based on utilization deviation
If util > 90%: rate increases over time
If util < 90%: rate decreases over time

APR vs APY

The UI displays APY (Annual Percentage Yield) using continuous compounding:

APY = e^APR - 1

Example: 5% APR = 5.127% APY

Oracle System

Cho Markets uses a modular oracle adapter system supporting multiple price feed providers.

Supported Adapters

Oracle Risk Parameters

Shares Math

Assets to Shares conversion uses virtual shares (1e6) and virtual assets (1) to prevent first-depositor manipulation:

// Constants
VIRTUAL_SHARES = 1_000_000  // 1e6
VIRTUAL_ASSETS = 1

// To shares (round down for supply, round up for borrow)
shares = (assets * (total_shares + VIRTUAL_SHARES)) / (total_assets + VIRTUAL_ASSETS)

// To assets (round up for withdraw, round down for repay)
assets = (shares * (total_assets + VIRTUAL_ASSETS)) / (total_shares + VIRTUAL_SHARES)

Health Factor

Position health is calculated as:

health_factor = (collateral_value * LLTV) / borrow_value

// Position is liquidatable when:
health_factor < (1.0 - health_factor_buffer)

// Default buffer = 0 (exact 1.0 threshold)

Protocol Fees

Protocol fees are collected as a percentage of interest accrued. Fee shares are minted during interest accrual and can be claimed by the fee authority.

// Fee calculation during interest accrual:
fee_amount = interest * fee_bps / 10000

// Fee shares minted:
fee_shares = fee_amount * total_shares / (total_assets - fee_amount)

// Claiming: fee_authority calls claim_fees to convert shares to assets

User Journeys

1. Lender: Earn Interest on USDC

1. Connect wallet with USDC balance
2. Go to User tab, select a USDC/SOL market
3. Enter amount in "Supply USDC" field
4. Click Supply - you receive supply shares
5. As borrowers pay interest, your shares become worth more assets
6. To exit: enter shares in Withdraw field, click Withdraw

2. Borrower: Borrow USDC Against SOL

1. Connect wallet with SOL balance
2. Go to User tab, select USDC/SOL market
3. Deposit SOL as collateral (will be wrapped to wSOL)
4. Borrow USDC up to LLTV ratio (e.g., 80% means 0.8 USDC per $1 SOL)
5. Use borrowed USDC as needed
6. To close: Repay borrowed USDC + interest, then withdraw collateral

3. Liquidator: Liquidate Unhealthy Positions

1. Monitor positions for health_factor < 1.0
2. When position is liquidatable, call liquidate instruction
3. Repay borrower's debt (100%)
4. Receive collateral + LLTV-dependent incentive bonus
5. Profit = collateral received - debt repaid

4. Admin: Create New Market

1. Initialize protocol config (one-time)
2. Enable LLTV value via timelock (submit, wait, accept)
3. Enable IRM type via timelock (submit, wait, accept)
4. Go to Admin tab, select loan/collateral tokens
5. Set LLTV, fee, IRM, and oracle parameters
6. Click Create Market - market is live for users

Example: Complete Borrow Flow

Market: USDC/SOL, LLTV: 80%, SOL price: $100

1. User deposits 1 SOL as collateral
   → collateral_value = 1 SOL × $100 = $100

2. Max borrow = collateral_value × LLTV
   → max_borrow = $100 × 0.80 = $80 USDC

3. User borrows 50 USDC (conservative)
   → health_factor = ($100 × 0.80) / $50 = 1.6 ✓ Healthy

4. If SOL drops to $60:
   → health_factor = ($60 × 0.80) / $50 = 0.96 ✗ Liquidatable

5. Liquidator repays full 50 USDC debt (100% close factor)
   → At 80% LLTV, ~6.4% bonus
   → Collateral seized: $50 × 1.064 = $53.20 worth
   → Liquidator receives: 0.887 SOL ($53.20 / $60)
   → Borrower keeps: 0.113 SOL ($6.80), debt cleared

Bad Debt Handling

Bad debt occurs when liquidation leaves remaining debt with zero collateral. It is socialized atomically during liquidation (no separate instruction) to prevent front-running. Losses are distributed proportionally across all lenders by reducing total_supply_assets.

// Bad debt socialization (automatic during liquidation):
if (position.collateral == 0 && position.borrow_shares > 0):
    bad_debt_amount = to_assets(position.borrow_shares)
    market.bad_debt += bad_debt_amount
    market.total_supply_assets -= bad_debt_amount  // Lenders absorb loss
    market.total_borrow_assets -= bad_debt_amount
    position.borrow_shares = 0

Events

• MarketCreated - New market deployed
• SupplyEvent - User supplies assets
• WithdrawEvent - User withdraws assets
• DepositCollateralEvent - User deposits collateral
• WithdrawCollateralEvent - User withdraws collateral
• BorrowEvent - User borrows assets
• RepayEvent - User repays debt
• LiquidateEvent - Position liquidated
• AccrueInterestEvent - Interest accrued
• BadDebtSocialized - Bad debt distributed to lenders
• FeesClaimed - Protocol fees claimed
• MarketFeeUpdated - Market fee changed
• OracleRiskParamsUpdated - Oracle params changed

Constants

Devnet Tokens

Devnet Faucets

Get test tokens for devnet: