Key Concepts
Rates and Identifiers
Pool
A supported lending market plus its fixed-rate risk configuration.
Series
One maturity and fixed rate inside a pool. Its internal identifier is handled automatically by the app. Fee and origination-bond settings are fixed when the series is created.
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. Positive spread transfers borrower prepaid to VRT assets; negative spread transfers VRT assets into prepaid for the borrower.
Positions and Assets
FRT
Fixed Rate Token represents borrower notional. It is recorded directly by the protocol rather than issued as a standalone transferable ERC-20 token.
VRT
Variable Rate Token represents a backer's share of the assets supporting a series. Its value accounts for both deposited assets and unsettled borrower spread.
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 series assets. effectiveAssets adjusts them for aggregate unrealized spread and prices VRT shares. freeAssets subtracts the future reserve requirement and accrued borrower claims; VRT withdrawals cannot take protected backing.
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, seriesKey, recipient). It advances the series, accrues the protocol wedge fee, and processes up to 64 crossed active ticks per call. A nonzero recipient may earn the configured sweep incentive.
Overlay Liquidation
When cumulative spread crosses beyond a borrower's funded tick, settlement sweeps that tick. 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.