Business Overview

Understanding the Rate Swap Protocol from a business perspective.

Executive Summary

Rate Swap Protocol is a decentralized interest rate derivatives platform built on Solana. It enables users to trade fixed vs floating rate exposures on oracle-defined rate indices such as perpetual funding rates and borrowing APRs.

Key Value Propositions

1. Capital Efficiency: Margined positions require only a fraction of notional value
2. On-Chain Settlement: Transparent, automated, and trustless execution
3. Market Access: Democratized access to interest rate derivatives
4. Composability: Integrates with DeFi ecosystem for novel use cases

Market Opportunity

Target Markets

Perpetual Futures Traders

• Hedge or speculate on funding rate volatility
• Manage funding costs for large perp positions
• Arbitrage funding rate differentials

Lending/Borrowing Platforms

• Fixed-rate lending/borrowing via swaps
• Interest rate risk management for protocols
• Liquidity providers hedging rate exposure

Institutional DeFi

• Treasury management with fixed-rate exposure
• Interest rate risk hedging for DeFi portfolios
• Market-making opportunities in rate derivatives

Speculators

• Directional bets on interest rate movements
• Volatility trading via rate swaps
• Curve trading across maturities (future)

Market Size

Total Addressable Market (TAM)

• TradFi interest rate derivatives: $500T+ notional outstanding
• DeFi lending markets: $10B+ TVL
• Perp DEX open interest: $5B+

Serviceable Available Market (SAM)

• On-chain rate derivatives potential: $1B+ in early stages
• Solana DeFi ecosystem: $5B+ TVL

Use Cases

1. Funding Rate Hedging

Problem: Perp traders pay/receive volatile funding rates

Solution: Open rate swap to lock in fixed rate

• Long perp + receive fixed swap = hedged funding exposure
• Predictable funding costs regardless of rate volatility

2. Fixed-Rate Lending/Borrowing

Problem: DeFi rates are variable and unpredictable

Solution: Lend floating + pay fixed swap = synthetic fixed-rate lending

• Borrowers can lock in fixed rates
• Lenders can guarantee fixed yields

3. Rate Speculation

Problem: No efficient way to express rate views

Solution: Trade rate swaps directionally

• Bullish on rates? Pay fixed, receive floating
• Bearish on rates? Receive fixed, pay floating

4. Liquidity Provision

Problem: Liquidity providers need yield opportunities

Solution: Provide liquidity to Rate Swap pools

• Earn fees from swap trades
• Take opposite side of user positions
• Diversified exposure across multiple markets

Competitive Landscape

Existing Solutions

Voltz Protocol (other chains)

• Interest rate swaps on Ethereum, etc.
• Similar margined AMM approach

Traditional Rate Derivatives

• OTC swaps, exchange-traded futures
• High barriers to entry, limited access

DeFi Fixed-Rate Protocols

• Notional Finance, Pendle, etc.
• Different mechanics (tokenized positions, AMMs)

Rate Swap Differentiator

• Solana Performance: Low latency, low cost, high throughput
• Flexible Oracle Integration: Supports multiple rate indices
• DV01 Risk Framework: Industry-standard risk management
• Margined Efficiency: Capital-efficient position management
• Composability: Integrates with Solana DeFi ecosystem

Go-to-Market Strategy

Phase 1: MVP Launch (Current)

• Single-market pools (funding rate index)
• USDC collateral
• Testnet/devnet deployment
• Community testing and feedback

Phase 2: Mainnet Beta

• Mainnet launch with audited contracts
• Initial liquidity bootstrapping
• Integration with perp DEXs (data partnerships)
• User education and documentation

Phase 3: Expansion

• Multiple rate indices (borrow, lending, etc.)
• Multi-collateral support
• Cross-margin functionality
• Advanced order types

Phase 4: Ecosystem Integration

• Partnerships with lending protocols
• Integration with perp exchanges
• Institutional onboarding
• API and SDK for developers

Next Steps

• Market Opportunity - Detailed market analysis
• Revenue Model - How the protocol generates value
• Risk Framework - Protocol risk management