Limits & Constraints

To ensure the stability and safety of Pike certain limits and constraints are applied to the market. These measures help maintain a healthy balance between supply and demand, reducing risks for all participants.

Supply Cap

The Supply Cap sets a maximum limit on the total amount of an asset that can be supplied to the protocol. This prevents excessive asset concentration and helps manage liquidity risk.

• Example: If the Supply Cap for USDC is set to 10 million, no additional USDC deposits will be allowed once the cap is reached, maintaining balanced liquidity in the market.

Borrow Cap

The Borrow Cap defines the maximum amount of an asset that can be borrowed from the protocol. This cap helps manage the risk of over-leveraging and ensures sufficient liquidity for withdrawals.

• Example: With a Borrow Cap of 5 million for ETH, the protocol will restrict new borrowing once this limit is approached, promoting a stable borrowing environment. These caps are monitored and adjusted based on market conditions to safeguard the protocol and its users.