Early Exit (IRS)
Interest Rate Swap (IRS) positions on XCCY are mark-to-market instruments.
Unlike Fixed Yield products, IRS positions can be exited at any time at the prevailing market price, with interest accrued up to the exit point.
Market-Price Exit
An early exit from an IRS position is executed at current market rates.
This means:
The position is closed against the swap pool or virtual AMM at the current fixed rate for the remaining tenor.
Accrued interest up to the exit timestamp is settled.
The user realizes a profit or loss (PnL) based on how rates moved since entry.
There is no concept of “zero settlement” for IRS positions — exits are always priced by the market.
Accrued Interest Settlement
When an IRS position is closed early:
interest accrued since the last settlement checkpoint is calculated,
the accrued amount is settled alongside the position close,
the remaining exposure is fully removed from the user’s account with early-exit penalty.
This ensures clean accounting and prevents residual rate exposure after exit.
Liquidity and Slippage Considerations
Early exit pricing depends on:
available liquidity in the relevant IRS pool,
current market depth and volatility,
position size relative to pool capacity.
In stressed or thin markets:
exits may experience slippage,
large positions may require partial or staged unwinds.
The protocol does not guarantee a specific exit price — the market does.
Risk Ownership
Unlike Fixed Yield products:
IRS users directly bear market risk,
profits and losses belong entirely to the position holder,
no insurance or smoothing layer intervenes in normal exits.
XLP Senior is not used to stabilize IRS exits; it is reserved for system-level insurance and Fixed Yield support.
Key Takeaway
IRS positions are fully tradable instruments:
exit anytime,
settle at market price,
realize accrued interest and PnL.
This gives users maximum flexibility, at the cost of accepting direct exposure to rate movements — exactly as intended for a derivatives market.
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