Lender Guide
The Missing Piece in DeFi Lending
On existing DeFi lending platforms, your yield changes every block. You deposit at 5% APR and a week later it is 2%. Or 12%. There is no way to know what you will earn over a defined period.
Global fixed-income markets represent $145 trillion. DeFi lending holds approximately $64 billion — roughly 0.04% penetration. The gap is not yield. It is predictability.
Fira introduces fixed-rate lending onchain, where the return is known at the moment of purchase, not revealed after the fact.
How Fixed-Rate Lending Works on Fira
Fira uses Bond Tokens (BT) — zero-coupon bonds that trade at a discount before maturity and redeem at par (face value) when the maturity date is reached.
As a lender, you buy BT at a discount. At maturity, each BT redeems for 1 unit of the underlying asset. The discount is your fixed yield.
There is no interest rate that accrues daily. There is no utilization curve. You buy below par, you redeem at par. The difference is your return, known in advance.
Step-by-Step
Wrap USDC into FW-USDC (Fira Wrapped USDC)
Use FW-USDC to buy BT-USDC on the fixed-rate AMM at a discount
Hold BT-USDC until maturity
At maturity, redeem BT-USDC for FW-USDC at par (1:1)
Unwrap FW-USDC back to USDC
The yield is locked at step 2 — the moment you purchase BT at its market price.
Concrete Example: Lending at a Fixed Rate
Scenario: You want to earn a fixed return on the May 14, 2026 maturity market.
1
Wrap 95 USDC into FW-USDC
95 FW-USDC (at 1:1 initial rate)
2
Buy 100 BT-USDC on the AMM
Pay 95 FW-USDC, receive 100 BT-USDC
3
Hold until maturity
—
4
Redeem 100 BT-USDC at par
Receive 100 FW-USDC
5
Unwrap FW-USDC to USDC
Receive ~100 USDC
Result:
You deposited 95 USDC
You received 100 USDC at maturity
Fixed yield = 5 USDC, known at the moment of purchase
Annualized: approximately 5.26% on a ~2-month term
The return is determined by the BT price at purchase. Once bought, rate movements in the broader market do not affect your position. You hold to maturity, you receive par.
BT: A Composable Fixed-Income Primitive
BT-USDC is not locked or staked. It is a standard ERC-20 token that can be:
Held to maturity for the fixed yield
Sold before maturity on the Fira AMM at the current market price
Transferred to any Ethereum address
Used as collateral in other DeFi protocols that accept ERC-20 tokens
Integrated into structured strategies (e.g., fixed-rate tranches, hedging instruments)
BT is the onchain equivalent of a zero-coupon bond. It is the building block for fixed-income strategies in DeFi. For full token mechanics, see Token Mechanics.
Two Ways to Lend
Option 1: Fixed Rates - Direct BT Purchase
Buy BT-USDC directly on the fixed-rate AMM. You choose the maturity, you see the price, you know the return. Full control over entry timing and maturity selection.
Best for: Advanced users, DAO treasuries with specific maturity targets, investors who want to manage duration actively.
Token received: BT-USDC — a tradable ERC-20 token. BT can be held, sold on the AMM before maturity (at market price), or used in other DeFi strategies. It is composable.
Option 2: Floating Rates (Supply to Market/Vault)
Deposit USDC into a floating rate market or curated vault. By depositing directly into a market, the user earns the lending rate from that market and is exposed to any risk associated with that market (bad debt risk). On the other hand, the curated vault has a professional curator allocates capital across floating-rate markets on your behalf. The curator manages maturity selection, rate optimization, and risk parameters within DAO-approved constraints.
How it works:
Deposit USDC into the market or vault
Curated vault: The curator allocates across available maturities and market types
The market or vault share appreciates as yield accrues
Withdraw at any time (subject to vault liquidity)
For more on curation and floating rate markets, see Curation Vaults or Floating Rate Markets.
What Fira Is Not
To set expectations accurately:
"Fixed yield means no risk"
Fixed rate means the return is predictable if held to maturity. Other risks (smart contract, bad debt) remain.
"I can exit anytime at the fixed rate"
Exiting before maturity means selling BT at market price. The effective yield may be higher or lower than the implied rate at purchase.
"The rate is set by the protocol"
Rates are discovered by market supply and demand in the AMM. The protocol does not set rates.
"This is a savings account"
This is a DeFi lending position with smart contract risk, bad debt risk, and market risk.
Risk Disclosure
Lending on Fira carries material risks. Read this section carefully before depositing capital.
Fixed Rate Applies Only at Maturity
The fixed rate is the return you receive if you hold BT to maturity and redeem at par. If you sell BT before maturity:
You sell at the current AMM market price
The effective yield may be higher or lower than the rate implied at purchase
In a rising-rate environment, BT prices drop (you sell at a loss relative to par)
In a falling-rate environment, BT prices rise (you realize a gain before maturity)
The word "fixed" does not mean "risk-free." It means the return is known in advance if held to the defined maturity.
Bad Debt Risk
If borrowers' collateral cannot be liquidated for enough value to cover outstanding loans, the shortfall is socialized among lenders. This reduces the FW-USDC/USDC exchange rate, meaning your redemption at maturity may return less than par.
Bad debt can originate from:
Fixed-rate borrowers whose collateral drops in value faster than liquidation can execute
Rehypothecated reserves in variable-rate vaults
Overcollateralization and liquidation incentives (LIF up to 1.15x) reduce but do not eliminate this risk. For details, see Bad Debt Risk.
Smart Contract Risk
Fira is a newly deployed protocol. Despite six independent external audits, an extended internal review, and a bug bounty program up to $500K, residual risk of bugs, exploits, or vulnerabilities remains. Participation in any DeFi protocol carries the risk of partial or total loss of funds. For audit details, see Audits.
Liquidity Risk
A portion of FW-USDC reserves is rehypothecated into variable-rate vaults. If a large withdrawal coincides with high vault utilization, temporary withdrawal restrictions may apply until the rehypothecation module rebalances. The reserve ratio target is 90%, with only approximately 10% of reserves rehypothecated at any time. For more, see Liquidity Risk.
Related
Fixed-Rate Markets — How the fixed-rate AMM works
Token Mechanics — BT, CT, and FW token design
Curation Vaults — Curated vault architecture
Rehypothecation — How FW-USDC reserves generate yield
Audits — Six independent external audits
Risk Framework — Full risk overview
This document is for informational purposes only and does not constitute financial advice. Returns described are projections based on market mechanics and are not assured. DeFi participation carries risk of partial or total loss of funds. All parameters are subject to governance approval.
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