# Fixed-Rate Lending

## Overview

Fira's fixed-rate lending allows borrowers to post collateral and borrow at a known, fixed rate. The mechanism works by using **Bond Token (BT)** as the loan token in a dedicated lending market. Since BT is redeemable for a known value at maturity, the borrowing cost is determined by the BT discount at the time of borrowing.

{% hint style="info" %}
The fixed-rate lending market has **no interest rate model** (`IRM = address(0)`). The rate is implicit in the BT discount — the difference between the BT price at borrow time and its face value at maturity is the borrower's fixed cost.
{% endhint %}

## How it works

### Borrowing

The router's `supplyAndBorrowSingleToken` function handles the full flow in a single transaction:

1. **Supply collateral** — Collateral tokens (e.g., Pendle PT tokens) are deposited into the lending market
2. **Borrow BT** — BT is borrowed from the lending market (supplied by the LiquidityInjector)
3. **Swap BT → FW** — BT is swapped to FW via the Fira Market AMM
4. **Redeem FW → USDC** — FW is redeemed for the desired output token

The borrower receives USDC (or another token) and holds a fixed-rate debt position denominated in BT.

### Repaying

**Pre-expiry:** Input token → FW (mint) → BT (AMM swap) → repay lending market.

**Post-expiry:** Input token → FW (mint) → BT+CT (mint via CT contract) → repay with BT. CT is minted but has zero economic value post-expiry.

### Collateral types

Fixed-rate markets currently support Pendle Principal Tokens (PT) as collateral:

* **PT-USDe** (Ethena USDe, May 7 2026 expiry)
* **PT-sUSDe** (Ethena sUSDe, May 7 2026 expiry)
* **PT-USDG** (Paxos USDG, May 27 2026 expiry)

### Liquidation

Positions that fall below the liquidation LTV (`LLTV`) can be liquidated. The liquidator repays part of the debt and receives collateral plus a liquidation incentive.

## Key features

* **Predictable costs** — Fixed rate determined at borrow time
* **Single-transaction flow** — Collateral supply, BT borrow, swap, and redemption in one call
* **Whitelist-gated supply** — Only the LiquidityInjector can supply BT to fixed-rate markets
* **Maturity grace period** — 24-hour grace period after BT expiry before liquidations are enforced

## Related pages

* [Borrow at Fixed Rate (User Flow)](https://docs.fira.money/developers/user-flows/borrow-fixed-rate)
* [Repay Fixed-Rate Debt (User Flow)](https://docs.fira.money/developers/user-flows/repay-fixed-rate)
* [Liquidity Injector](https://docs.fira.money/developers/features/liquidity-injector)
* [ActionBorrow](https://docs.fira.money/developers/protocol-contracts/router/action-borrow)


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