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In the current system, the solver’s posted bond is its backing capital. It is the first loss-absorbing layer between borrower fixed terms and venue floating risk.

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1. Minimum backing and posted backing

Every live position has two different backing numbers:
  • the minimum backing required for that request,
  • the amount the solver actually posts.
The difference between the two is the solver’s cushion. That cushion is what gives room for venue funding to move against the solver without immediately pushing the position into forced resolution. The current minimum schedule is intentionally simple:
That means longer tenors and different debt assets demand different amounts of solver capital before a quote can go live.

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2. Why solvers often post more than the minimum

Posting only the minimum leaves very little room for the book to breathe.
  • reduced chance of forced backing liquidation,
  • more room for floating costs to move,
  • more time to migrate to a better venue,
  • more resilience if the borrower closes at an inconvenient time.
For active desks, the question is rarely “what is the minimum allowed?” It is “how much backing do we want behind this position if conditions get worse before we can react?“

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3. When backing is still healthy

A position can lose backing health before backing reaches zero. Health depends on two different checks at the same time:
  • posted backing must still sit above the required floor,
  • drawdown from accumulated floating losses must stay within the allowed protection threshold chosen at origination.
That second condition matters. A position can still look funded in absolute terms while already being too far underwater relative to the remaining backing.

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4. When a solver can remove backing

Solver backing can come back out only when it is truly excess. In practice:
  • the position still has to remain healthy after the withdrawal,
  • floating losses cannot already be eating through that apparent excess,
  • unresolved positions can still need meaningful backing even after maturity.
Maturity alone does not free capital. If the economics of the position have not been settled yet, the backing is still supporting the close.

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5. How losses hit backing

When a position is closed or forcibly liquidated, IRIS compares what the borrower owes under the fixed terms with what the venue actually cost. If venue funding ended up more expensive than the borrower obligation, solver backing absorbs that shortfall first. If venue funding ended up cheaper, the solver keeps the positive spread, and any recognized collateral-side surplus is booked separately as solver value. If the shortfall is larger than the remaining backing, someone closing the position still has to cover the residual debt-side gap.

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6. Backing distress liquidation

If backing health fails, anyone can force a distress liquidation. That waterfall is simple:
  • slash solver backing,
  • repay as much venue debt as possible with the slashed amount,
  • pay the liquidator incentive,
  • end fixed-rate protection for the position.
Any slashed debt asset not needed for venue repayment or the incentive is not refunded to the solver.

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7. How to think about capacity

For operations, it helps to separate four buckets:
  • minimum required backing,
  • posted backing currently committed to protection,
  • true excess backing that could be removed without harming health,
  • realized economics that are already claimable but are not the same thing as free backing capital.
For how this fits into the full borrower and solver lifecycle, see Lifecycle Flows.