Intro
LP collateral only works if it can be priced conservatively. That sounds obvious, but it is where most of the difficulty begins. A standard token can often be valued with a relatively direct market reference. An LP position cannot. Its value depends on the prices of the underlying assets, the structure of the pool, the position’s current inventory split, accrued fees, and, for concentrated liquidity, the relationship between current price and the active range. In practice, the question is not only what the position is worth. The more important question is what it can realistically be worth during liquidation. That distinction is central to how Avana thinks about oracle design.
Context
Avana Oracle is being designed around the idea that collateral value should be based on recoverable value, not on optimistic net asset value. For LP backed lending, this is a major difference. A position may have a strong theoretical mark under normal conditions, but that does not mean the same value can be realized safely during an unwind. If the protocol lends against best case assumptions, it is effectively financing collateral inflation. If it lends against stressed but realistic liquidation assumptions, it is building from a more defensible foundation. Avana’s oracle architecture is meant to enforce that discipline from the start.
Model
That is why Avana Oracle is not built as a single spot-price lookup. It is a multi-layer collateral valuation engine. The first step is to price the underlying assets from robust external references rather than relying on raw AMM spot state. The second step is to reconstruct the LP position deterministically, whether that means pool balance reconstruction for fungible LPs or direct decomposition of concentrated liquidity positions by range, liquidity, and current price. The third step is to discount that reconstructed value through recovery haircuts that reflect liquidation slippage, unwind friction, and impermanent loss risk. Borrowing power should come from that discounted collateral value, not from the most flattering mark the position could print on paper.
Value
This distinction matters because LP collateral is one of the easiest places for a lending system to fool itself. AMM pool state can look healthy while being locally distorted. A concentrated position can appear strong while actually sitting in a riskier inventory composition than users assume. Thin pool depth, same transaction manipulation, stale inputs, and venue-specific failure modes can all produce numbers that look precise without being trustworthy. Avana’s oracle model is meant to separate apparent value from reliable collateral value by combining external asset pricing, deterministic LP reconstruction, and protocol-level safeguards designed specifically for LP markets.
Risk
The protocol’s oracle interface reflects that broader philosophy. Instead of collapsing everything into one number, the system distinguishes between reconstructed principal value, fee value, and reserved value used to absorb protocol risk buffers. That is important because fee accrual, recoverability, and risk reserves do not all deserve the same treatment inside a lending market. By standardizing those components across different LP types, the spoke layer can reason about fungible LPs, NFT LPs, and multi-asset positions in a more consistent way while still respecting how different venues expose different state.
Flow
Different AMM families require different verification paths, but Avana Oracle is designed to keep the same underlying principle across all of them. Curve stable LPs, Uniswap v2 pairs, Uniswap v3 NFTs, Balancer weighted pools, Aerodrome pairs, and other pool types all expose collateral state differently. The oracle does not treat those differences as noise. It treats them as part of the valuation problem.
System
External prices remain the anchor, while pool-specific data and TWAP-style verification are used to check whether the reconstructed collateral state remains coherent and resistant to manipulation. In that sense, TWAPs are not the primary truth source. They are part of the safety apparatus that helps the protocol decide whether the collateral picture can be trusted at all.
Users
This is also where manipulation resistance becomes especially important. Avana’s oracle design includes deviation thresholds, pool price difference constraints, recovery haircuts, open interest caps, and an oracle sentinel that can react when feed health degrades or verification inputs become inconsistent. These are not cosmetic defenses. LP collateral is unusually exposed to same transaction abuse, thin market distortions, and stale or contradictory signals because the collateral itself is structurally more complex than a simple token balance. If a lending protocol wants to support LPs seriously, it needs to assume that the pricing surface will eventually be tested.
Outlook
The broader point is that Avana Oracle is not being designed to answer only “what is this LP worth?” It is being designed to answer the harder question: “what is this LP worth as collateral inside a liquidation-aware credit system?” That is why recoverable value matters more than headline value, why external prices matter more than raw AMM spot state, and why pool-specific verification matters more than generic oracle optimism. Borrow power should exist only when that full stack of assumptions holds together.
Takeaway
That is ultimately the oracle problem Avana is built to solve. LP collateral should not be priced loosely and trusted later. It should be reconstructed conservatively, verified across multiple layers, and discounted according to what the protocol can actually expect to recover in stress. In a system built around LP backed borrowing, that is not a secondary detail. It is the foundation of the market itself.