The Accountability Engine

A fixed-rate guarantee is worthless without capitalized backing. IRIS requires solvers to deposit bonds (in the identical asset they wish to underwrite) into the BondManager contract.

The Two-Tier Bond Architecture

The bond system scales efficiently using two tiers:

1. Initial Lock: The minimum bond locked when a solver takes a position. This is set dynamically as a percentage of the borrow amount (bondRatioBps, default 20% or 2000 bps).

2. Idle Bond: The solver's remaining deposited bond pool beyond the initialLock. This acts as a secondary buffer that can be shared across multiple loans.

More details about the Bond-Lock Model can be found here.

Slashing Mechanics

Solvers face total loss of capital for failing to honor their quoted obligations.

Liquidation Deficit Slashing

If variable rates skyrocket, the borrower’s fixed interest repayment will not be sufficient for the LoanPod to close the variable debt on the venue.

When this deficit (loss = actualDebt - borrowAmount) exceeds the initialLock, the position enters a liquidation phase:

A position is fully liquidatable when loss > initialLock + idleBond, meaning the solver cannot cover further losses from any source.

Anyone (Keeper bots) can permissionlessly call liquidatePosition() to slash the Solver's bond, get paid with the keeper reward, and move the position into fallback on the venue already carrying the debt.