# HORIZON PROTOCOL

<h2 align="center">Introduction</h2>

Horizon is a DeFi platform that combines lending, collateralized borrowing, leverage, and liquidity provisioning into a single pane of glass through which capital can be supplied, borrowed, and deployed across multiple strategies.

Horizon operates with two tokens that perform distinct functions. HORIZON is the protocol’s primary value accrual asset with a fixed supply. The majority of platform revenue is programmatically used to purchase and remove HORIZON from circulation. NOVAE is a revenue-backed incentive token that coordinates participation by distributing incentives across Horizon’s markets and vaults.

Horizon operates through three core primitives.

**Earn** allows users to deposit supported assets into vaults that supply liquidity to isolated lending markets. Borrowers pay interest to access liquidity, and depositors receive yield generated from borrowing demand.

**Borrow** allows users to access liquidity by depositing collateral. Each market operates with predefined loan-to-value limits and liquidation thresholds. Markets are isolated so risk events remain contained.

**Liquidity** allows users to deposit asset pairs into vaults that deploy capital into automated concentrated liquidity positions. These vaults generate trading fees and distribute incentives based on vault share ownership.

Protocol activity across these systems generates revenue through interest spreads, trading fees, and related operations. Revenue is sent through smart contracts that buyback reward tokens according to predefined allocation rules, with a portion permanently burnt from circulation.

The goals of Horizon are to:

Integrate lending, borrowing, leverage, and liquidity provisioning within a single interface.

Provide isolated markets with clearly defined risk parameters.

Allow users to access liquidity without exiting long-term positions.

Generate protocol revenue from real economic activity.

Route protocol revenue into deterministic multi-asset buybacks and supply reduction.

Horizon operates alongside existing money markets while introducing its own economic model.

This document describes the architecture, tokenomics, governance, and system risk parameters.

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<h2 align="center">System Overview</h2>

Horizon is composed of four modules. These modules are: Earn, Borrow, Multiply, and Liquidity.

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<h3 align="center">Earn</h3>

Earn allows users to supply assets and receive yield from borrowers.

Deposited assets are allocated across isolated Morpho lending markets. Each market maintains independent accounting for balances, positions, interest accrual, and liquidations, ensuring that risk is contained within individual markets without cross-market exposure.

#### What Earn provides

* Yield from borrower interest
* Participation-based incentives
* Compartmentalized credit exposure
* Alignment with Horizon’s buyback through protocol revenue routing
* Built-in liquidation fee and oracle extractable value (OEV) revenue distribution

#### How it works

* Deposit supported assets into an Earn vault
* Capital is allocated across isolated Morpho markets
* Borrowers pay interest to access liquidity
* Depositors receive yield and protocol incentives

#### Key properties

* Market-level risk isolation
* Contributions to protocol revenue and supply reduction

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<h3 align="center">Borrow</h3>

Borrow allows users to take a loan by using their assets as collateral.

Collateral is supplied into isolated markets with predefined risk parameters. Each market maintains independent accounting and liquidation thresholds, preventing risk transmission across markets.

Borrowing activity generates interest, forming a core source of protocol revenue.

#### What Borrow provides

* Access to liquidity without exiting long-term positions
* Defined risk parameters per market
* Overcollateralized borrowing
* Alignment with Horizon’s revenue and incentive mechanisms

#### How it works

* Users deposit supported collateral into an isolated market
* Assets may be borrowed up to the market’s maximum loan-to-value ratio (LLTV)
* Interest accrues on borrowed balances
* Positions may be repaid at any time to unlock collateral (subject to liquidity availability)
* If collateral value falls below required thresholds, the position becomes eligible for liquidation

#### Key properties

* isolated markets
* Overcollateralized credit design
* Revenue derived from borrowing demand
* Incentives distributed based on participation

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<h3 align="center">Multiply</h3>

Multiply allows users to increase exposure to an asset through automated leverage.

It operates within isolated lending markets governed by predefined risk parameters. Borrowed assets are programmatically redeposited to expand position size without manual execution.

#### What Multiply provides

* Automated position scaling
* User-defined leverage within predefined limits
* Exposure within isolated market boundaries
* Incentive accrual across the full position size

#### How it works

* A user supplies collateral into a supported lending market
* A target leverage level is selected
* The protocol borrows against the position
* Borrowed assets are re-supplied
* The borrow and resupply cycle repeats within loan-to-value constraints until the selected leverage is reached

Interest accrues on the borrowed balance throughout the position lifecycle.\
NOVA incentives accrue based on total supplied and borrowed exposure within the position.

#### Key properties

* Isolated market risk boundaries
* Predefined loan-to-value constraints
* Automated borrowing and redepositing
* Incentives accrue on total supplied and borrowed exposure

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<h3 align="center">Liquidity</h3>

Liquidity enables users to deposit asset pairs into Horizon vaults and earn trading fees and NOVA incentives.&#x20;

Deposited assets are deployed into concentrated liquidity positions on decentralized exchanges. Concentrated liquidity positions capital near the active price, increasing fee generation and capital efficiency. Users receive vault shares representing their proportional ownership of the assets, fees, and incentives.

#### What Liquidity provides

* Yield from trading fees
* Participation-based NOVA incentives
* Higher capital efficiency through concentrated liquidity
* Vault shares representing ownership and earnings
* Alignment with Horizon’s buyback via revenue routing

#### How it works

* Deposit supported asset pairs into a Horizon liquidity vault
* The vault deploys assets into concentrated liquidity positions
* Trading fees accrue to the vault
* NOVA incentives are distributed based on vault share ownership
* Redeem vault shares to withdraw assets

#### Key properties

* Concentrated liquidity deployment
* Automated position management
* Vault-level accounting and share ownership
* Fee compounding into the vault
* Contributions to protocol revenue and supply reduction

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<h3 align="center">Universal Buy &#x26; Burn</h3>

The Universal Buy & Burn receives protocol revenue in any token, purchases reward tokens on the open market, and permanently removes them from circulation.

All revenue generated by lending, borrowing, liquidity provision, and related protocol activity is routed into decentralized, user-incentivized smart contracts that buyback via optimized swap paths designed to minimize slippage and market impact.

Acquired tokens are allocated according to fixed protocol parameters. A defined portion is permanently removed from circulation. The remainder is used for structured redistribution under the protocol’s incentive framework.

Buyback volume increases as a function of protocol revenue. Increased activity results in greater token acquisition and a reduction in circulating supply, concentrating ownership across the remaining supply base.

***

<h3 align="center">Two Token Architecture</h3>

Horizon uses two tokens with distinct economic functions. HORIZON serves as the protocol’s value accrual asset, and NOVA serves as the incentive asset. Supply rules are predefined, value routing is enforced at the smart contract level, and supply metrics are publicly observable.

#### HORIZON

HORIZON captures protocol revenue through buybacks and permanent burns. Revenue generated from lending, borrowing and liquidity is routed into market purchases of HORIZON. Purchased tokens are divided equally between permanent burns and future incentive distribution.

HORIZON supply is fixed at genesis, minting is permanently disabled, and circulating supply adjusts through buyback execution.

Holding or deploying HORIZON within the platform unlocks preferential rates and reduced fees across core features. Utility is integrated directly into lending, borrowing, liquidity, and mining activity.

#### NOVA

NOVA distributes incentives across Earn, Borrow, and Liquidity markets. It emits at a fixed daily rate and is allocated according to adjustable weight parameters. Reward share is determined by position size and effective share weight. Protocol-defined flows purchase NOVA using trading fees and miner revenue. The protocol publishes daily emissions, daily burns, and net supply change.


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