Key Concepts
Rates and Identifiers
Pool
A supported lending market plus its fixed-rate risk configuration.
Expiry and Series
An expiry is one maturity inside a pool. Its fee and origination-bond settings are fixed when it is first used. A series is one fixed rate of one expiry, named by a series key that the app handles automatically. Fixed rates sit on the pool's rate grid.
Fixed Rate and Variable Rate
The variable rate is derived from the lending market's debt-index change during settlement rather than a displayed APR. The fixed rate is the agreed rate used for the overlay.
Cap Rate
The maximum variable factor exchanged against the fixed leg. Variable interest above the cap is outside the Interest Exchange hedge.
Spread
fixed - capped variable. When positive, the borrower's prepaid pays backers; when negative, the floating credit adds to the borrower's prepaid.
Positions and Assets
FRT
Fixed Rate Token represents borrower notional. It is recorded directly by the protocol rather than issued as a standalone ERC-20 token. A borrower's FRT in one expiry forms one position with one or more rate legs. A leg can be moved to another wallet with moveFRT only if that wallet has accepted it with approveFRT (a leg is a liability that shares the recipient's prepaid).
VRT
Variable Rate Token represents a backer's share of one rate's book in one expiry. Its value includes income accrued up to now.
Prepaid
Loan tokens supplied by the borrower in advance to fund fixed-leg payments that may become due. Settlement nets the fixed and floating legs, so prepaid is consumed only when the borrower owes the difference. A borrower can add coverage or withdraw eligible surplus.
Origination Bond
Loan tokens escrowed when FRT is minted. A pre-expiry burn receives the vested portion and forfeits the rest to VRT assets; the bond is fully refundable at or after expiry. A swept position forfeits its bond.
Reserve, Effective Assets, and Free Assets
Backer deposits become the book's assets. effectiveAssets adds income accrued since the last update and prices VRT shares. The reserve a book must keep for its active notional is the worst case of the capped floating rate over the remaining term; freeAssets is what exceeds it, and VRT withdrawals cannot take the reserve.
Quotes and Permissions
QuoteMarket Quote
A one-shot EIP-712 instruction containing maker, optional taker, pool ID, series key, exact FRT notional, maker VRT amount, maker nonce, deadline, and salt. It can open a position with takeQuote or roll one with takeRollQuote.
Executable Quote
A quote whose deadline, maker nonce, signature, cancellation/fill status, balance, allowance, pool capacity, and requested notional still pass current checks. Acceptance surfaces should not present expired or otherwise non-executable history as an action.
Operator
An address approved through InterestRatePool.setOperator. The production fill flow gives QuoteMarket this permission once so it can mint FRT on the borrower's behalf. Keeper automation requires separate permission for KeeperBundler. Permissions can be revoked with setOperator(operator, false).
Bundler3
The trusted multicall forwarder pinned in the pool and quote market. It exposes the original wallet as a transient initiator, allowing an atomic bundle without granting Bundler3 token allowances or operator permissions.
Settlement and Risk
Settlement
Anyone can call settle(poolId, expiry, budget, recipient). It advances the expiry and sweeps broke cells within budget units of work; later calls continue any backlog. The recipient earns the configured sweep incentive.
Overlay Liquidation
When a column's level passes a cell's funding tick, settlement sweeps the cell and every position in it. The FRT overlay is removed from active accounting; the underlying lending protocol's collateral and debt are not liquidated by this operation.
Adapter
An ICoreAdapter resolves the loan token, borrows or repays for an authorized account, and exposes a monotonic market debt index. Some adapters act directly on the user's protocol account; managed adapters deploy a dedicated account where native delegation is unavailable.