How it works

1. The index

The program reads the Pyth SOL/USD price P and computes what one token should be worth:

index (in SOL per token) = NF × P / 100
index (in dollars)       = NF × P² / 100

NF starts at exactly 1 (stored as nf_wad = 10^18) and only changes through funding.

2. A short mints

A short opens a vault, deposits SOL, and calls mint_power(amount). The program:

Reads the price (read_price), applies funding.
Adds amount to the vault's debt.
Checks collateral × 10,000 ≥ debt value × 15,000: the vault must stay at 150% or more.
Mints amount tokens to the short.

The debt value of amount base units is amount × NF × P / 100 lamports (debt_value). The token has 9 decimals.

3. Holders buy from the pool

The pool holds SOL and tokens. buy(lamports_in, min_out) swaps SOL for tokens with the constant product rule and a 0.3% fee:

out = reserve_out × a / (reserve_in × 10,000 + a),  a = amount_in × (10,000 − 30)

The tokens land in the buyer's own token account. That is the whole long position: a token in a wallet. sell(tokens_in, min_out) is the reverse.

4. Funding

The pool keeps a running sum of its price over time. The market price used for funding (mark) is the pool's average over one to two TWAP windows. On every update:

ratio = clamp(mark / index, 0.8, 1.25)
NF   ← NF × ratio ^ (−dt / funding_period),   dt capped at 86,400 s

If the token trades above its index (ratio > 1), NF shrinks. Every short's debt is measured in NF-adjusted value, so it shrinks too. Holders pay shorts without a single transfer. If the token trades below its index, NF grows and shorts pay holders.

5. Liquidation

When a vault is under 150%, anyone may call liquidate(amount):

amount can be at most half the debt (or all of it when the debt is 0.001 token or less).
The liquidator burns amount of their own tokens.
The vault pays them debt_value(amount) × 1.10 in SOL, capped at the vault's collateral.

6. Closing a short

burn_power(amount) repays debt with tokens and needs no price, because it only makes a vault safer. withdraw(lamports) takes SOL out and, if debt remains, checks the 150% line again.

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