Provide Liquidity

Providing liquidity means earning fees by supplying capital to IRS pools rather than taking directional rate risk.

Liquidity providers enable traders to enter and exit IRS positions and are compensated through trading fees and spread capture.

What You Are Providing

When you provide liquidity, you:

• supply collateral to a virtual AMM (vAMM),

• support both fixed and floating rate trading,

• earn fees from swaps executed against the pool.

You do not choose trade direction — the pool absorbs flow from all traders.

How Liquidity Provision Works

1. Select:

   • asset,

   • tenor,

   • settlement type (coin-set or USD-set).

2. Deposit collateral into the IRS pool.

3. The pool mints LP shares representing your position.

Your LP shares track:

• pool PnL,

• accumulated fees,

• rate exposure over time.

Yield Sources

LP returns come from:

• trading fees paid by IRS takers,

• spread between fixed and floating legs,

• funding imbalances over time.

Fee tiers are configurable and depend on:

• pool,

• tenor,

• market conditions.

Risk Profile

Providing liquidity exposes you to:

• interest rate risk (pool-level),

• imbalance risk during strong directional flow,

• mark-to-market volatility before settlement.

Returns are not fixed and can vary daily.

Margin & Capital Efficiency

LP positions can be held under:

• Isolated margin,

• Portfolio margin,

• X-Mode (clustered margin for correlated assets).

This allows LPs to:

• reuse collateral,

• hedge exposures,

• run multi-leg strategies efficiently.

Liquidity Removal

LP shares can be redeemed:

• at maturity (net settled),

• or earlier at current pool valuation.

Early withdrawal is priced by the market and may incur slippage.