IPOR refers to a set of protocols, smart contracts, and software that forms a set of Decentralized Applications (DApps) for Decentralized Finance (DeFi) focused on interest rate derivatives. The core IPOR infrastructure consists of three main parts: the IPOR Index (Index), Liquidity Pools with an Automated Market Maker (AMM) and Asset Management smart contracts. The first type of interest rate derivatives supported by the AMM are Interest Rate Swaps (Swap or IRS). The system also incorporates a Decentralized Autonomous Organization (DAO) and a Treasury in the spirit of decentralization.
The IPOR token is the protocol's native token issued to the parties involved with the project: builders, investors, protocol users, and the like. It's an ERC20 token issued on L1 Ethereum.
The IPOR Protocol consists of two main parts:
- A benchmark interest rate for DeFi (“The Index”). Currently available for USDT, USDC, and DAI (ETH coming up). These are calculated and published on-chain are public goods in the Ethereum ecosystem.
- A suite of interest rate derivative DEXes (“The IRDs”) that quote rates for 28-day interest rate swaps for the above markets.
The IPOR Index
Currently, there are three IPOR rates for USDC, USDT, and DAI which have essentially different rate behavior. An IPOR ETH rate is on the horizon. These are all currently spot rates, as there is really no yield curve in DeFi, and the lack of the yield curve presents the index with a huge market opportunity.
The IRDs
The first instrument to reference the IPOR rates is a 4 week IRS. It takes the best of DeFi incorporating a liquidity pool and an AMM. The liquidity pool is a passive underwriter for like asset. The AMM prices the instruments based on a few different quant models broken down into something cheap enough to run on Ethereum. The taker is quoted a fixed rate, the floating rate is the IPOR (printed on chain via an oracle).
IPOR plans to mature into a fully community-driven DAO. IPOR Labs will transfer ownership into the IPOR DAO, and complete ownership and control of the IPOR Protocol will be in the IPOR token holders. IPOR labs will continue to participate and make proposals; however, the ultimate approval will be in a decentralized manner via the DAO.
