About Amplifi
Under-Collateralized Lending
How Amplifi enables lending beyond collateral through deposit wallet policies and automated liquidation.
The over-collateralization problem
In DeFi today, borrowing $100 requires locking up $150+ in collateral. Protocols like Aave and Compound enforce this because they have no way to restrict how borrowed funds are used. If a borrower takes the money and runs, the protocol seizes collateral. Over-collateralization is the safety net.
This is capital-inefficient. It locks up more value than it creates. And it prevents an entire class of trading strategies that depend on leverage.
How Amplifi solves it
Amplifi extends credit beyond collateral by controlling how funds are used — programmable custody. The methodology is called private key encumbrance:
- Each user gets a TEE wallet (an ERC-1967 proxy) on Polygon
- The wallet is controlled by a TEE-managed keypair that enforces spending policies
- Users can use the funds in the margin wallet for approved operations: trading on Polymarket, loan repayment, and withdrawal
- The risk engine monitors positions continuously and liquidates automatically when thresholds breach
- Both liquidation and spending policies are proven on-chain by the verifiable computation property of TEEs
Since the margin account, not the user, controls the funds, lending pools can extend credit beyond the collateral deposited.
Isolated lending pools
Amplifi does not use a single shared pool. Each lending pool is isolated:
- Separate on-chain contract with its own capital
- Independent risk parameters (interest rate, max leverage per category)
- Category-specific pools (e.g., a crypto-only pool vs. a sports pool)
- Bad debt in one pool cannot cascade to another
This is the "Morpho for under-collateralized lending" thesis. Lenders choose which pools to supply based on their risk appetite. The protocol is the infrastructure, not the risk taker.
The trust model
| Layer | What it does |
|---|---|
| Deposit wallet | Restricts fund usage to approved trading operations |
| Risk engine | Monitors prices and depth; triggers liquidation before bad debt |
| Lending pool | On-chain contract; lender deposits and borrower repayments are transparent |
| Liquidation executor | Sells shares on Polymarket CLOB, repays loan, returns remaining equity |
What happens on default
If a position is liquidated and the sale proceeds are less than the loan principal, the shortfall is first covered by available cash in the trader's account. Any remaining difference is bad debt absorbed by the lending pool. This is the core risk lenders accept.
Amplifi mitigates bad debt through:
- Market specific risk parameters that account for individual market dynamics
- Dynamic liquidation pricing that tightens as orderbook depth thins
The goal is not to eliminate bad debt — it is to make it rare and bounded.