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Horizon Finance Introduces Innovative Protocol For Fixed And Floating Interest Rate Swaps

Horizon Finance has announced the launch of a decentralized interest rate markets protocol for DeFi users. The aim of the new protocol is to solve payment shortfalls in DeFi space, providing sufficient margins, and regulating peer-to-peer interactions among market players.

According to a recent press release, the new protocol is necessary for alleviating the issues of the current market, where existing platforms with permissionless entry imply a block-by-block resolution for transactions, constricting interaction between market participants. The new protocol will allow users to leverage both fixed and floating interest rates while receiving rewards based on deposited asset ratios and the interest rate options selected. 

The toolkit on offer will be facilitating cross-protocol operations by relying on a rolling auction markets approach. Market players will be able to partake in preferential payment term bidding, ensuring a completely transparent and fair environment for interest rate selection.

The basis of the new protocol is derived from traditional market interest rate-determining mechanisms that have been translated into a decentralized setting. The peer-to-peer interaction premise will stimulate floating interest rate formation by giving users a choice of two options – acting as a liquidity provider at a floating rate in the role of a rate maker or as a participant in a rolling auction in the role of a rate bidder. 

The pool’s lowest IR bidder will thus be providing payouts until it is exhausted, flooring a maximum 50% yield for all participants. The protocol significantly simplifies market transactions by eliminating both counterparty risks and redundant liquidation mechanisms.

The solution is being introduced to provide balance to the overheated and highly unregulated DeFi market, where a lack of risk-hedging instruments is resulting in the detraction of potential investors and the discouraging of active ones.

The founders of Horizon Finance are also intent on deploying new functionality in the near future. Among the instruments to be released are an automated yield configurator and a bot assistant. The latter will provide users with advice on forming portfolios based on interest rate options, tenors and available liquidity pools, and other parameters.

The protocol received immense support from leading investors, raising over $1.3 million from Framework Ventures, Alameda Research, NGC, Ruby Capital, and other VC funds.

Image Sourced from Pixabay

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