The perpetual interest rate swap is an innovative new product created by the team at Strips, building around the three pillars of robustness, capital efficiency and flexibility.
Our key innovations of the perpetual interest rate swaps are:
There is no expiry of the contracts
Naturally mimics the payoff of a traditional IRS
Each contract has a single market
Unlike traditional interest rate swaps in finance which have fixed terms, Strips perpetual interest rate swap trade in perpetuity. This means that users can open a trade without worrying about rolling over their position at the end of each month or each year.
How is a perpetual contract settled?
The profit/loss of a perpetual contract is settled directly into your wallet when you close your position.
The funding rate is based on the reference pool/vault yield. For example, the reference rate for the Nerve.fi 3Pool market would be the Nerve.fi 3Pool deposit yield. Funding rates are calculated per block.
Strips perpetual contracts do not require traders to post 100% of collateral. Strips Exchange offers traders up to 28x leverage on our markets.
Example: Lock in your yield
Alice enters the Nerve.fi 3Pool yield farm, currently yielding a variable rate of 115%. On Strips Exchange, the market for Nerve.fi 3Pool is trading at 100%. To lock in 100% return for a year, Alice goes on Strips Finance and sells the equivalent USD notional amount of perpetual interest rate swaps. After 365 days, the APY of the yield farm that Alice has invested in has dropped to 20%. However, Alice is fully hedged, and combined with her profits on Strips, she receives 100% in total yield.