How Swivel works

A basic description of Swivel's core mechanic.

Swivel’s platform directly facilitates the ability to manage risk by allowing users to trade predictable cash flows (fixed-rate) via receiving tokenized zero-coupon bonds or the ability to leverage capital exposure by purchasing interest coupons. While the first implementation of this model is a straightforward mechanism to exchange fixed for floating cash flows on the Compound Finance platform, in future the same model can be extended to meet a variety of investment, risk management, treasury and funding needs, as well as interoperable solutions across multiple yield-providing venues.

Investors seeking stable returns post orders on our order book for a desired amount of principal, as well as rate sought and desired maturity date. Maturity dates are synchronized to support fungible positions and assure an orderly market with straightforward dates to compare returns against.

Interest rate speculators fill the order, paying an upfront premium equal to the rate sought and in return receive a time-locked vault of the tendered principal, which is then invested in floating rate positions. The principal balances are tendered against synchronized maturity dates, making comparisons across dates transparent and supporting fungible positions against common maturities. The floating rate side is highly leveraged, offering these participants the possibility of significant returns.