# Protocol Primer ## What is Fira? (ELI5 version) Fira is a DeFi protocol that lets you **split yield-bearing assets into separate fixed-rate and floating-rate components**, and then **trade, lend, and provide liquidity** with those components on Ethereum. Think of it this way: if you have a yield-bearing stablecoin (like USDC deposited in a vault), Fira wraps it into a standardized token called **FW** (Fira Wrapped), then lets you split that FW into two pieces: * **Bond Token (BT)** — a fixed-rate principal claim. You know exactly what it's worth at maturity. * **Coupon Token (CT)** — a floating-yield claim. Its value depends on how much yield the underlying asset generates. ### Why does this matter? In traditional finance, separating principal from yield is a well-established concept (zero-coupon bonds, interest rate strips). Fira brings this to DeFi, enabling: * **Fixed-rate borrowing** — Borrowers get predictable costs instead of volatile variable rates. * **Yield speculation** — Traders can go long or short on future yield without holding the full underlying asset. * **Capital efficiency** — LPs can provide liquidity in the BT/FW pool while simultaneously earning floating yield via CT. ### The core elements of Fira #### **FW (Fira Wrapped)** FW tokens are ERC-20 wrappers around yield-bearing assets. They expose a standardized deposit/redeem interface so the rest of the protocol doesn't need to know the specifics of the underlying vault. The first implementation is **USDCFW**, which wraps USDC through an ERC-4626 vault. **Key features:** * Standardized interface for any yield-bearing asset * Exchange rate increases as yield accrues * Rehypothecation — idle liquidity is deployed to vaults for yield while maintaining enough reserves for redemptions #### **Bond Token (BT)** BT is the fixed-rate side of the yield split. Each BT represents a claim on 1 unit of underlying at maturity. Before maturity, BT trades at a discount — the discount is the implied fixed rate. **Key features:** * Fixed-rate principal claim * Trades at a discount to FW in the AMM * Used as the loan token in fixed-rate lending markets #### **Coupon Token (CT)** CT is the floating-rate side. Holding CT entitles you to the yield generated by the underlying FW between now and expiry. **Key features:** * Floating yield exposure * Interest accrues automatically and can be claimed at any time * Post-expiry, remaining yield flows to the protocol treasury #### **Fira Market (AMM)** The AMM is a specialized BT/FW pool with time-decaying implied-rate pricing based on a logit curve. As maturity approaches, BT converges toward FW in value. **Key features:** * BT/FW trading pool with LP tokens * TWAP oracle for pricing BT, CT, and LP tokens * Swaps and mints revert after expiry; burns work at any time #### **Fixed-Rate Lending** Borrowers post collateral (e.g., Pendle PT tokens) and borrow BT at a fixed rate. The router automatically swaps BT to FW and then to USDC, so borrowers receive stablecoins in a single transaction. #### **Variable-Rate Lending** A separate lending market (powered by SisuVault, an ERC-4626 vault) allows standard variable-rate borrowing with collateral like wstETH and cbBTC. #### **Router** The router is the single entry point for all user operations. It uses a diamond-like proxy pattern where each function is delegated to a specialized facet contract. Users never interact with the underlying contracts directly — everything goes through the router. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.fira.money/developers/fira-protocol-primer.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.