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About the IPOR Protocol
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As a DeFi protocol, IPOR refers to a series of smart contracts that provide a benchmark interest rate and enable users to access Interest Rates Derivatives on the Ethereum blockchain. That is possible by combining three core pieces of infrastructure: the IPOR Index, the IPOR AMM and liquidity pools, and Asset Management smart contracts.
Learn more about the IPOR v1 Protocol architecture in the blog. In October 2023, the IPOR Protocol was upgraded to v2, featuring a brand new infrastructure. Learn more about the main IPOR v2 technological improvements in the blog.
IPOR is an abbreviation for Inter Protocol Over-block Rate. It derives its name from major indices from traditional finance like the LIBOR - the London Interbank Offered Rate, and the SOFR - Secured Overnight Financing Rate and adapts it to DeFi. The IPOR is a mid-market (not offered) rate that is sourced block-over-block, the closest proxy to real-time possible in blockchain.
The IPOR Protocol is built on the premise that if decentralized finance (DeFi) is a global disruptive sandbox, credit will be the catalyst. For the DeFi credit markets to evolve into the fixed-income markets of tomorrow they must provide the same risk management tools that traditional financial (TradFi) institutions require. The IPOR Protocol delivers those with the IPOR indices and interest rate derivates such as swaps that reference the index. Interest rate derivatives provide stability for fixed-income players, allowing them to manage their interest rate risk.
To learn more about why IPOR has the potential to be an important piece from the DeFi “money legos”, read this article.
IPOR’s mission is to become the foundational layer of the DeFi credit markets. Calculated and published on-chain, the IPOR indices are a public good that anyone can reference and build upon. The methodology is transparent, public, and auditable. At the same time, the interest rate swaps that reference the IPORs can be used as an input to bootstrap the DeFi yield curve, a prerequisite for liquid and mature financial markets. The Index and Derivatives provide tools for other builders for more complex financial products.
The IPOR Manifesto states the founding principles at the center of the IPOR Protocol and outlines the philosophy to be followed in the process of achieving IPOR’s mission.
Interest rate derivatives are financial instruments that allow a trader to take a position on the behavior of interest rates. Interest rate swaps are one type of interest rate derivative that involves the exchange of cashflows between two parties taking opposing interest rate positions such as pay fixed or pay floating rates.
The IPOR IRS is the cornerstone derivative product of IPOR. The IRS allows a market participant to be a Payer or Receiver of fixed rates and take a contract against the liquidity pool. To learn more about interest rate swaps, access this Docs page.
The IPOR indices are public goods published on-chain, providing a transparent view of the benchmark interest rates in DeFi that anyone can reference. They can be used to view the current cost of credit, to benchmark risk-adjusted vs. risk-free rewards, or as a reference for other credit products, deals, or derivatives.
The IPOR interest rate swaps can be used for hedging, arbitrage, or speculation of DeFi borrowing costs or lending yields. Learn more about the Protocol uses here.
IPOR aims to be fully on-chain, decentralized, and run by a community-driven DAO. The project will follow a path of progressive decentralization referenced in the Conceptual Whitepaper. Initially, the Protocol will go through a caretaker phase led by IPOR Labs AG, a Swiss-based software development firm formed to build the protocol. Once critical community mass is achieved and the required governance tools have been developed, ownership will gradually be transferred to the IPOR DAO. The IPOR token can be staked for pwIPOR which has a central role in IPOR Protocol governance since complete ownership and control of the Protocol is envisioned to rest with pwIPOR token holders. To learn more about governance, visit the IPOR DAO section.
The IPOR token is the protocol's native token issued to the parties involved with the project: builders, investors, liquidity providers, and the like. It's an ERC20 token issued on Ethereum L1.
100,000,000 IPOR tokens were minted at inception. No additional token will ever be minted.
The IPOR Token can be staked for Power IPOR (pwIPOR) which is the governance token of the IPOR DAO and can also be used for things like boosted rewards for the IRS liquidity pools. Complete ownership and control of the Protocol will rest with pwIPOR token holders.
Power IPOR tokens can also be used to improve the returns (APR) of liquidity providers to the IPOR Protocol liquidity pools.
The native IPOR token can also be traded for other tokens on decentralized or centralized exchanges. Find more information in the dedicated Docs section.
Power Tokens or pwIPOR are a staked, non-transferable representation of IPOR tokens that can be used to participate in IPOR DAO Protocol governance and to improve returns of liquidity provision operations on the Protocol.
Since they are non-transferable, pwIPOR tokens cannot be traded peer-to-peer or on exchanges (beware of scams claiming otherwise). Find more information on Power Tokens here.
The liquidity provider tokens (ipTokens) are interest-bearing tokens representing liquidity deposited in the IPOR Protocol liquidity pools.
Upon deposit, a user would exchange the native token such as USDC for ipUSDC at the exchange rate at the time of deposit. The exchange rate between ipTokens tokens and the underlying liquidity tokens (USDC, USDT, DAI, stETH) is not 1:1 since ipTokens tokens accrue interest over time from Sum of All Payoffs (SOAP). The ipToken can be exchanged for the underlying token at the time of withdrawal based on the current exchange rate.
IPOR Labs AG, a Swiss-based software development company, is initially developing the IPOR Protocol. In the future, the IPOR DAO can fund multiple protocol developers based on governance and budgetary decisions.
A detailed list of IPOR investors, including their relevant areas of non-financial support can be found in the IPOR blog.
The IPOR Protocol has undergone multiple smart contract audits.
This dedicated Docs section contains a full list of completed IPOR Protocol and IPOR Token audits. Audit reports will become available there as soon as they are finalized.
The IPOR token features a hard cap of 100,000,000 tokens. The mint function is not available beyond the initial mint.
Tokens are split into the following allocations:
- 30.00% DAO Treasury
- 25.00% Liquidity Mining
- 13.15% DAO Operations
- 20.00% Team
- 11.85% Investors
As stated in the IPOR Manifesto, the IPOR Protocol is blockchain agnostic. The IPOR Protocol can launch on any chain if such a decision is in line with the goals of the Protocol and the IPOR DAO.
Considerations around launching the Protocol on other blockchains or Layer 2 protocols will be the availability of liquid credit markets, security implications, and the availability of an ecosystem of DeFi protocols that can integrate the IPORs or make use of IPOR-based interest rate derivatives. These parameters will be set by and voted on by the IPOR DAO participants.
Launching new IPORs beyond USDC, USDT, DAI, and stETH (in the works) must be supported by market demand and liquidity, and will be dependent on a decision by the IPOR DAO to support new assets.
Yes, a stETH IPOR rate is currently being developed.
Last modified 1mo ago