Trade IRS

The Interest Rate Swap (IRS) product allows users to trade, hedge, or earn yield on interest rates without locking capital until maturity.

Overview

Unlike Locked Yield products, IRS positions are fully mark-to-market and can be exited at any time through market pricing.

IRS is the core instrument for:

• active rate trading,

• hedging floating or fixed exposure,

• building synthetic fixed or floating positions,

• advanced yield and arbitrage strategies.

Virtual AMM Model

IRS positions live inside a virtual AMM pool composed of:

• fixed-rate tokens,

• floating-rate tokens,

• time-to-maturity decay.

Key properties:

• no bilateral matching,

• continuous pricing,

• liquidity provided by LPs (including XLP),

• all exits happen via secondary market trading.

The AMM reflects:

• current market rate,

• time remaining,

• liquidity depth,

• funding regime.

Position Lifecycle

1. User opens an IRS position by:

   • taking fixed / paying floating, or

   • paying fixed / receiving floating.

2. Position is continuously revalued.

3. PnL accrues over time.

4. User may:

   • exit early at market price, or

   • hold until maturity for final settlement.

Settlement at Maturity

At maturity:

• fixed and floating legs converge,

• final interest difference is settled,

• positions are closed automatically.

No liquidity is required at maturity — only final accounting.

Margin & Risk

IRS positions are margin-based.

Risk comes from:

• rate movements,

• time decay,

• leverage,

• collateral valuation.

Margining supports:

• Isolated Margin

• Portfolio Margin

• X-Mode (clustered margin)

Liquidations occur if collateral falls below required thresholds.