What could be built.

An instrument is a composition of obligations and liens made by an orchestrator. Anyone may build one, without permission. The pages below describe what could be built, and where each stands; none is a decision to build it.

VaultObligationLienSpotAuctionBONDContingent obligation
Bullet loanVaultObligationLien
Insured BTC billVaultObligationLienSpotAuctionContingent obligation
Liquidation cover for Aave and Morpho borrowersVaultObligationLienContingent obligation
Cash-settled futureVaultObligationLienSpotAuctionContingent obligation
BONDVaultObligationLienBOND

The same blocks support many more compositions — instalment loans and mortgages, credit lines, repo, notes and bonds, ladders, credit protection, tranches, forwards, options and rate swaps, invoice finance, netting at a set date. Most are explored, not designed.

Idea, except: mortgage Designed; notes Designed; forwards Designed; options Designed; insurance on Gavel obligations Designed

A loan is an option package. For a loan with collateral C, repayment R and maturity T, the borrower's position pays max(C − R, 0): a call on the collateral. The lender's claim pays min(R, C): a covered call, or equally a fixed-rate bond less a put. An insurance policy pays max(R − C, 0): the put. A claim with a policy pays R: a fixed-rate bond.

Put–call parity binds them: collateral = obligor position + insured claim − policy.

The interest rate is the price of the put: the spread a lender charges prices the put it writes, so a lower loan-to-value means a cheaper put and a lower rate.

A lender holds the payoff of a covered call, with no oracle and no options venue. Origination auctions, the auction for claims and positions, and insurance together would form an options market on BTC priced by auction.

What stays out, by design: perpetuals and high leverage, which need continuous prices; American options exercisable at any instant; instruments tied to off-chain values such as inflation or weather; escrow for off-chain delivery. Third parties may build any of these with an oracle of their choosing; the base layer does not.