Swaps & time-based loans
without liquidations.

1 · Deposit into a pool

Users deposit a token from a Palmyr pair. A loan can be created as long as tokenIn and tokenOut belong to the same pair. The pool handles both swaps and LP.

2 · 80% payout, 20% LP

When a loan is created, the borrower receives 80% of their deposit as an immediate payout. The remaining 20% is added as liquidity to the pool, keeping capital productive and supporting long-term LPs.

3 · Time-based loan

Loans have a fixed duration — by default 3 months, configurable between 1 and 12 months. If the borrower does not repay in time, the LP share remains in the pool; there is no liquidation cascade.

No liquidations

Loans are governed by time, not price. If you don't repay, you simply lose the ability to reclaim your initial deposit, while the LP portion continues to support the pool.

LP-first design

Every loan reinforces liquidity: 20% of the deposit becomes LP in the same pair, earning swap fees and improving depth for future traders and borrowers.

Dynamic swap fees (0.01%–1%)

Swap fees are dynamic with a default of 0.3% and a configurable range between 0.01% and 1%. They depend on trade size and gas price, and can never exceed the configured loan fee, helping reduce sandwich attacks.

Governance-controlled parameters

Loan fees (1%–10%), loan duration (1–12 months), and swap fee bounds (0.01%–1%) are configured by governance. The community steers the protocol over time.

Loan Parameters

• 80% payout, 20% added as LP
• Default loan fee: 5%
• Configurable loan fee: 1% – 10%
• Default duration: 3 months (configurable between 1 and 12 months)
• Loans are valid if tokenIn and tokenOut belong to the same pair

Swap Fees

• Default swap fee: 0.3%
• Configurable range: 0.01% – 1%
• Swap fee cannot exceed the current loan fee
• Dynamic: depends on trade size and gas price
• Designed to make sandwich attacks more costly

LP Mechanics

• 20% of each loan deposit is added as liquidity to the pool
• The LP position belongs to the debt owner and continuously earns swap fees
• If the loan expires, the LP remains in the pool and can still be withdrawn by the debt owner
• No liquidations — if the loan expires, the borrower keeps the payout but can no longer reclaim their initial deposit
• Combined with dynamic swap fees and loan-generated liquidity, this can result in more competitive yields for LPs than traditional AMMs

Whitepaper

Read the Palmyr whitepaper for a deeper look at the 80/20 model, liquidity mechanics, and governance parameters.

📄 Open Whitepaper (PDF)