Interest rate swaps are financial derivative contracts where two parties agree to exchange future interest payments based on a notional principal amount. In decentralized finance, these swaps enable participants to trade fixed interest rate obligations for variable ones, or vice versa, on digital asset loans. This mechanism allows users to manage interest rate risk or speculate on future rate movements without directly altering their underlying loan positions. They provide a tool for hedging against interest rate volatility.
Context
The introduction of interest rate swaps into decentralized finance marks a maturation of the DeFi ecosystem, providing more sophisticated tools for risk management and financial engineering. News often highlights platforms offering these derivatives as a means for users to gain more control over their borrowing and lending exposures. The adoption of such instruments is a key indicator of DeFi’s increasing complexity and its alignment with traditional financial market capabilities.
Boros tokenizes perpetual funding rates into YUs, creating a capital-efficient hedging primitive that structurally expands the yield-trading total addressable market.
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