> For the complete documentation index, see [llms.txt](https://docs.fira.money/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.fira.money/security-and-risk/risk-framework/interest-rate-risk.md). # Interest Rate Risk ## Overview Fira's fixed-maturity and floating-rate markets face exposure to interest rate volatility. This disclosure is not exhaustive and should be read alongside broader risk disclosures. ## Fixed-Maturity Markets The "fixed" rate operates through market-driven pricing of BT (Bond Token) relative to underlying assets. Market conditions — including liquidity, borrowing demand, and risk appetite — can widen or tighten the discount. Users who exit before maturity may experience realized rates that differ significantly from entry rates. ## Floating-Rate Markets Borrowing rates depend directly on utilization (borrowed liquidity divided by supplied liquidity). Supply or demand shocks can cause utilization to spike rapidly, potentially increasing borrowing costs sharply and keeping them elevated until conditions normalize. ## Risk Manifestation * Early exits from fixed-maturity positions may yield higher or lower realized rates than anticipated * Floating-rate markets can experience rapid and material rate increases when large liquidity withdrawals or borrowing spikes occur ## Mitigations (With Limitations) * Fixed-maturity markets employ liquidity concentration around reasonable rate ranges, though slippage and material movements remain possible * Floating-rate markets rely on curator-managed liquidity reserves and parameters, but curators may be unable to respond adequately during stress ## Key Warnings * Users should not assume fixed-maturity rates remain locked before maturity * Anticipate potential rate spikes in floating markets * Displayed rates are indicative and may not reflect actual execution prices --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## 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, and the optional `goal` query parameter: ``` GET https://docs.fira.money/security-and-risk/risk-framework/interest-rate-risk.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. 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.