1. Introduction

Piggy is a decentralized borrowing protocol that offers interest-free, efficiently collateralized loans backed by $BNB. Unlike competing DeFi lenders, Piggy runs liquidations by making use of a Stability Pool mechanism instead of auctions, which allows it to make more efficient use of capital and offer loans with minimum collateral ratios as low as 110%.

Loans on Piggy are drawn in $PUSD, a dollar-pegged stablecoin. Any user (borrower or otherwise), can deposit $PUSD in the Stability Pool to become a Stability Provider and earn $PIGGY rewards while doing so. When participating in the Stability Pool, users will gradually see their $PUSD balances decrease while also seeing their $BNB (and $PIGGY) balances increase. These changes come from Stability Providers receiving pro-rata shares of $BNB when liquidations happen, along with a continuous stream of $PIGGY rewards.

$PIGGY is the secondary token of the protocol, which can be staked to receive a share of protocol fees from loan originations, and $PUSD redemptions. In due time, following the principles of progressive and orderly decentralization, $PIGGY will also be used to participate in the protocol’s governance-minimized decentralized autonomous organization and vote on matters like Upgrades, Treasury policies, and Contributor grants.

2. Key Differentiators

2.1 Governance-Minimized

Unlike other lending or borrowing protocols that rely on their governance participants to define key parameters such as collateral ratios, interest rates, and liquidation penalties; all of Piggy’s operations are autonomously run by algorithms and parameters defined by smart contracts. As a governance-minimized protocol, Piggy is not subjected to governance attacks or governance failure on its core mechanisms, thus guaranteeing true decentralization.

2.2 Zero-Interest Borrowing

Current lending or borrowing protocols rely on interest rates to both mitigate their lending risks, produce an income for the protocol, and reward their supply markets. These interest rates, often being variable, are burdensome for borrowers who cannot assess these delayed costs properly and are exposed to the risk of their repayment balance grow beyond their repayment ability if interest rates spike. To avoid crushing users under a mountain of debt, Piggy only charges a low one-time borrowing fee whenever a loan is issued. Besides being less risky for the user, this borrowing fee is an upfront cost, so borrowers are better able to assess their cost of lending and time to payback.

2.3 Collateral-Efficient Borrowing

By making liquidation instantaneous and more efficient, Piggy needs less collateral to provide the same security level as similar protocols that rely on lengthy auction mechanisms to sell off collateral in liquidations. Liquidations can be carried out by anyone as soon as a PiggyBank drops below the Minimum Collateral Ratio of 110%, with the debt of the PiggyBank being absorbed by the Stability Pool and its collateral distributed among Stability Providers. Piggy's low requirements for collateralization represents the greatest efficiency known amongst lending protocols catering to $BNB collateral.

The reason Piggy can offer quick liquidations without auctions is the Stability Pool. The Stability Pool is the first line of defense in maintaining protocol solvency. By acting as a direct source of liquidity to repay debt from liquidated PiggyBanks, the Stability Pool ensures that a liquid market for $BNB is readily available, which implicitly also ensures that the total $PUSD supply always remains backed by collateral.

2.4 A Closely-Pegged Stablecoin

The stability of the exchange rate between $PUSD and $USD is maintained via the creation of a price floor and price ceiling through arbitrage opportunities. These ‘hard peg mechanisms’, enacted through direct processes, are explained below.

Should the value of $PUSD fall below US$1 at any time, users can use the ability to redeem $PUSD for $BNB at face value (i.e. 1 PUSD for US$1 of BNB). In addition, the minimum collateral ratio of 110% prevents $PUSD from raising too much above the value of US$1.

$PUSD also benefits from less direct mechanisms for $USD parity — called “soft peg mechanisms”. One of these mechanisms is parity as a Schelling point. Since Piggy treats $PUSD as being equal to $USD, parity between the two is an implied equilibrium state of the protocol. Another of these mechanisms is the borrowing fee on new debts. As redemptions increase (implying $PUSD is below $1), so too does the baserate — making borrowing less attractive which keeps new $PUSD from hitting the market and driving the price below $1.

2.5 Autonomous Stress Resistance

Piggy is not only governance-minimized, but also designed with responsiveness to changing conditions in mind. Consider the one-time borrowing and redemption fees that are algorithmically set by the system. In case more redemptions are happening, the borrowing fee would continue to increase, discouraging borrowing. This is because the system assumes $PUSD is likely trading at less than 1 $USD and is designed to react and discourage more $PUSD from hitting the market under these conditions.

Another important line of defence of the protocol is known as "Recovery Mode". Recovery Mode is a system level security mechanism that incentivizes borrowers to behave in ways that promptly raise the total collateral held in the system back above 150%, and to incentivize $PUSD holders to replenish the Stability Pool. When the system's Total Collateral Ratio (TCR) goes below 150%, PiggyBanks with collateralization ratios below 150% can be liquidated. Moreover, borrowing fees are brought to 0% and any behavior in the system that would decrease the TCR is blocked. This economic design seeks to encourage users to top-up their collateral, repay their debt, and replenish the Stability Pool with $PUSD.

3. Core Components

There are three core components to the Piggy protocol, explored below.

3.1 PiggyBanks

A PiggyBank can be thought of as like an account at Piggy. PiggyBanks track 2 balances: a user's collateral in $BNB, which comes from assets that have been deposited by said user; and a user's debt denominated in $PUSD, which is the stablecoin minted by Piggy. Using these two balances, Piggy smart contracts also track each user's collateral ratio.

In order to borrow, a user must open a PiggyBank. Each PiggyBank is linked to a BSC address and one address can only have one PiggyBank. Users can add/withdraw their collateral and borrow/repay their debt. When users make changes to these balances, their PiggyBanks' collateral ratio changes accordingly.

A PiggyBank can be closed when it has no debt, and re-opened at any time.

3.1.1 Borrow

Users can borrow from Piggy by adding $BNB as collateral to their PiggyBank and taking out a loan in the $PUSD stablecoin. Currently, Piggy only supports $BNB as collateral.

When borrowing, users are charged a one-time borrowing fee. This fee is calculated as a dynamically percentage of the total loan amount, ranging from 0.5%-5%. The protocol calculates this fee based on the frequency of redemptions at the last redemption time. This is a fully algorithmic mechanism executed by the smart contracts of the protocol, and requires no governance or human participation. If the borrowing fee increases past 0.5%, it will decay by as much as a halving every 12 hours, eventually stopping at 0.5%.

The minimum debt of a PiggyBank is 200 $PUSD. The protocol will also hold 20 $PUSD as a Liquidation Reserve. If a PiggyBank is liquidated, the Liquidation Reserve will be given to the liquidator to cover their gas expenses. However, if the PiggyBank debt is repaid, the user receives back the Liquidation Reserve.

As an illustration, let us say a user creates a PiggyBank with 5 $BNB as collateral, with $BNB trading at $200 apiece, and a debt of 200 $PUSD (worth $200). The collateral ratio will be 5*200/200 = 500%. The Liquidation Reserve will be $20 and the borrowing fee (assuming the protocol is at minimum fees) will be 180*0.5%/(1+0.5%) = 0.90 $PUSD, the user will receive 179.1 $PUSD.

In this illustration, the user debt is 200 $PUSD. However, this amount will not increase as there are no interest rates. There are also no loan maturity dates. In this example, the user's PiggyBank would only get liquidated if $BNB falls more than 70% if the system is in Recovery Mode, or more than 78% in normal conditions. The loan can be repaid by the user at any time and the 5 $BNB collateral will be returned to the user.

3.1.2 Redemption

The redemption mechanism is key to keeping the $PUSD on peg. When the market price of $PUSD drops under $1, arbitrageurs can "redeem" or exchange their $PUSD for $BNB at the face value of $1. The redemption mechanism automatically seeks the riskiest PiggyBank on the protocol to redeem against, this would be the PiggyBank with the lowest collateralization ratio in the protocol. As redemptions happen, the $PUSD supply in the market is reduced, and the price of $PUSD returns to the equilibrium price of $1.

All redemptions in Piggy are subjected to a redemption fee. The redemption fee is updated dynamically. Each redemption increases the redemption fee, and the passing of time decays the redemption fee. Redemptions are charged out of the $BNB that is being drawn from the protocol.

Here is a more detailed example to explain:

If the current redemption fee is 1%, the price of $BNB is $500 and a user redeems 100 $PUSD, they would get $100/$500 - 1%*$100/$500 = 0.198 $BNB.

If your PiggyBank is redeemed against, it won't make you lose any value. However, you will lose some of your $BNB exposure.

3.2 Stability Pool & Liquidation

The Stability Pool is the first line of defense in maintaining the security of the system. It acts as the source of liquidity to repay the debt for liquidated PiggyBanks. By doing this, the total $PUSD supply always remains backed.

Users with $PUSD can deposit to the Stability Pool. When the collateral ratio of any Piggybank drops under 110%, the liquidator in the market will trigger the Stability Pool to do the liquidation. $PUSD will be repayed to the liquidated PIggyBank and burnt. The $BNB collateral will be transfered to the Stability Pool as the liquidation reward which can be claimed by the Stability Pool providers through their pro-rata share of the pool. Moreover, the liquidator in the market will get 0.5% of the liquidated collateral amount and 20 $PUSD as the liquidation reward.

To illustrate, let’s say there are 1,000,000 $PUSD in the Stability Pool and a user's deposit in the pool 100,000 $PUSD. Now, a PiggyBank with debt of 200,000 $PUSD and collateral of 400 $BNB is liquidated at a $BNB price of $545, and thus at a collateral ratio of 100% * (400 * 545) / 200,000 = 109%. Given that the user's pool share is 10%, their deposit will go down by 10% of the liquidated debt (20,000 $PUSD), i.e. from 100,000 to 80,000 $PUSD. In return, they will gain 10% of the liquidated collateral, i.e. 40 $BNB, which worth $21,800 at the time of liquidation. The user's net gain from the liquidation is $1,800. On the other hand, the maximum loss for the liquidated PiggyBank will be 100%*10/110 = 9.09%.

The protocol has a safeguard in case the Stability Pool is empty, a secondary mechanism called redistribution. The protocol will redistribute the debt and collateral from a liquidated PIggyBank to all other existing PiggyBanks. The redistribution of debt and collateral is done in proportion to the recipient PiggyBank's collateral amount. Here is a simple example to explain:



Collateral $BNB


Debt Increase

Collateral Increase

New debt

New Collateral $BNB

New CR

Net Gain USD



















































To incentivize the early Stability Pool providers, the protocol will distribute $PIGGY to them based on their pro-rata share in the pool. The formula for the $PIGGY emissions to the Stability Pool is 40,000,000 * (1-(1/2)^year).

3.3 Recovery Mode

Recovery Mode is a system level security mechanism. When the Total Collateral Ratio (TCR) of the system falls below 150%, Recovery Mode will be triggered.

Recovery Mode is designed to encourage collateral top-ups and debt repayments, and also itself acts as a self-negating deterrent: the possibility of it occurring actually guides the system away from ever reaching it. Recovery Mode is not a desirable state for the system.

Moreover, during the Recovery Mode, the liquidation will work as below:

ICR = Individual Collateral Ratio

MCR = Minimum Collateral Ratio

TCR = Total Collateral Ratio

SP = Stability Pool


Liquidation Behavior

ICR <=100%

Redistribute all debt and collateral (minus $BNB gas compensation) to active PiggyBanks.

100% < ICR < MCR & SP $PUSD > PiggyBank debt

$PUSD in the Stability Pool equal to the PiggyBank's debt is offset with the PiggyBank's debt.

The PiggyBank's $BNB collateral (minus $BNB gas compensation) is shared between depositors.

100% < ICR < MCR & SP $PUSD < PiggyBank debt

The total Stability Pool $PUSD is offset with an equal amount of debt from the PiggyBank. A fraction of the PiggyBank's collateral (equal to the ratio of its offset debt to its entire debt) is shared between depositors. The remaining debt and collateral (minus $BNB gas compensation) is redistributed to active PiggyBanks.

MCR <= ICR < TCR & SP $PUSD >= PiggyBank debt

The Stability Pool $PUSD is offset with an equal amount of debt from the PiggyBank. A fraction of $BNB collateral with dollar value equal to 1.1 * debt is shared between depositors. Nothing is redistributed to other active PiggyBanks. Since its ICR was > 1.1, the PiggyBank has a collateral remainder, which is sent to the CollSurplusPool and is claimable by the borrower. The PiggyBank is closed.

MCR <= ICR < TCR & SP $PUSD < PiggyBank debt

Do nothing.


Do nothing.

4. Piggy-nomics

4.1 $PIGGY

$PIGGY is the secondary token issued by the Piggy protocol. It captures the fee revenue that is generated by the system and incentivizes early adopters. Holders can stake their tokens to earn the fees generated by loan issuance and $PUSD redemptions. Protocol fees are paid in both $PUSD and $BNB, borrowing fees are paid in $PUSD and redemption fees are paid in $BNB, respectively. $PIGGY stakers receive a pro-rata share of fees, as they are charged.

$PIGGY is primarily earned by depositing $PUSD into the Stability Pool. Other ways of earning $PIGGY are by contributing to the protocol and being awarded a grant, as well as by participating in liquidity mining programs announced by Piggy.

4.2 Piggy USD ($PUSD)

$PUSD is a stablecoin that will remain firmly pegged to the U.S. dollar due to the algorithmic governance of the protocol and the direct redeemability. The main purpose of $PUSD is to provide a stablecoin that reduces the volatility of Piggy-issued loans backed by $BNB collateral. In time, $PUSD can be spent like other stablecoins, however $PUSD can also be optionally deposited in the Stability Pool to guarantee liquidity for $BNB liquidations, the core mechanism of the Piggy protocol.

4.3 Genesis Allocation

$PIGGY is the governance token that allows users to participate in the development of Piggy and capture fee revenue generated by the protocol. The issuance of $PIGGY to participants is what allows for the bootstrapping of the system by incentivizing early adopters, as well as provides for the long-term health of the protocol. For those reasons, Piggy’s distribution is heavily weighted towards the community.

At genesis, we plan to distribute ++100,000,000 (one hundred million) $PIGGY tokens, as follows:

52.5% as Direct Incentives to the Community

  • 40,000,000 $PIGGY as Stability Incentives. These are awarded to Stability Pool depositors. $PIGGY as Stability Incentives issuance follows a yearly halving schedule, described by the following function: 40,000,000 * (1-0.5^year). The purpose of this issuance curve is to favorably incentivize early adopters while also maintaining incentives for the long term.

  • 2,500,000 $PIGGY will be allocated to the Liquidity Providers who will provide liquidity for $PUSD or $PIGGY in the future.

  • 10,000,000 $PIGGY as Contributor Mining, where grants will be given in 1-year streams to contributions to the growth & development of the protocol, for example:

    • community devs that maintain/upgrade the protocol.

    • community ops people that help with the different community channels and run the day-to-day community functions including governance.

    • teams that build on top of / integrate Piggy.

    • individuals that promote Piggy with campaigns like special NFTs, video explainers, and other high quality content.

    • collaborations with complementary protocols e.g. join liquidity mining programs, insurance programs, etc.

27% to Team and Advisors

  • 27,000,000 $PIGGY are reserved to current and future team members that build Piggy continuously and the advisors that lent their expertise to Piggy’s success.

  • The $PIGGY on this category is subjected to a 90 days lockup, and for team members it is subjected to a minimum 90 days engagement, with 1/4th of the award vesting immediately afterwards and 1/360th every subsequent day.

13% to Investors

  • 13,000,000 $PIGGY are reserved for the investors who supported Piggy’s pre-launch development.

  • The $PIGGY on this category is subjected to a 90 days lockup, with 1/4th of the award vesting immediately afterwards and 1/360th every subsequent day.

5% for the Treasury

  • 5,000,000 $PIGGY will be set aside in a Treasury reserve to fund operational liquidity.

  • The Treasury will also contain stable assets and reserve assets procured with the balance left from the pre-launch development (raised from early investors).

2.5% for an Airdrop

  • 2,500,000 $PIGGY will be distributed to a selected number of addresses on Binance Smart Chain to guarantee a wide distribution and a strategic base of support for the protocol. The details will be announced shortly after launch.

5. Conclusion

Piggy is a unique addition to the Binance Smart Chain landscape, greatly benefitting borrowers and those looking to leverage their $BNB with maximal efficiency and safety. The protocol presents many differentiators in design that allow it to provide a unique offering of zero-interest borrowing with low collateral. In order to fulfill its mission of improved borrowing experiences, the protocol mints a stablecoin, $PUSD, which can be immediately used to facilitate liquidations by being deposited in the Stability Pool. $PIGGY rewards are earned, among other things, for being a Stability Provider, and can be deposited to earn a share of protocol fees. All Piggy core mechanisms are governance-minimized, yet holders of $PIGGY can participate and vote in other governance related activities to guide the growth and development of the protocol.

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