Contractual Repayment Mechanics

While IRIS provides flexible tools for managing your positions, the protocol enforces strict mathematical rules around the lifecycle of a loan to ensure solvers (the market makers underwriting your fixed rate) are not exploited.

Because solvers commit their bonded capital to guarantee your rate for a highly specific duration, the smart contracts must preserve their expected yield.

Yield-Preserving Early Repayment

While a Solver is actively supporting your loan, early repayment is still governed by coupon preservation.

That rule exists because the Solver priced and bonded a very specific fixed-rate exposure. If borrowers could freely refinance away the moment conditions improved, Solvers would absorb the downside of rate spikes without retaining the economics they originally underwrote.

For that reason, the protocol preserves the fixed-rate amount associated with the agreed term while Solver-backed protection remains active.

Where That Rule Stops

Yield preservation only applies while the position is still being actively maintained as a fixed-rate loan.

If the position enters fallback because the remaining bond coverage is no longer sufficient, fixed-rate protection ends at that point. From then on, the borrower may close by paying what was owed through the covered fixed window, without carrying the unpaid remainder of the original preserved coupon.

Fallback is therefore the boundary between two states:

• a live fixed-rate position with coupon preservation

• a venue-level position that can be closed directly

The Continuous Late Spread (Anti-Free Camping)

Maturity dates on IRIS are strictly enforced. If a loan remains open past its agreed-upon maturity date (plus a very brief ~1-hour grace window), a programmatic penalty mechanism activates.

When a fixed-rate loan expires naturally, the solver's locked bond is released back into their pool. Because the solver is no longer guaranteeing the rate, the protocol must aggressively incentivize you to close the position and repay the underlying venue debt.

If you leave the position open post-maturity, the loan rolls over into a continuous penalty mode:

1. You still owe the fixed amount earned during the loan's core duration.

2. You begin accruing a time-weighted penalty spanning from the maturity timestamp to the current timestamp.

3. This penalty is calculated at a significantly elevated rate (Fixed Rate + Penalty Fee BPS), causing your debt obligation to grow far faster than a standard loan.

This Anti-Free Camping mechanism ensures borrowers do not maliciously abandon their active variable-rate debt on the underlying venues while hiding behind a depleted IRIS proxy contract.