♻️Auto-Rolling

Understanding the automatic reinvestment mechanism in the Fixed-Rate Lending Protocol

Overview

Auto-Rolling is an innovative feature in the Fixed-Rate Lending Protocol that streamlines the reinvestment process for users. In traditional finance, bond redemption at maturity requires manual reinvestment, which can be cumbersome. Secured Finance has integrated this auto-roll feature into its protocol, automatically reinvesting matured loans into the nearest 3-month bucket, offering several key advantages.

What You'll Learn

• How Auto-Rolling mitigates reinvestment risk

• How the automatic reinvestment process works

• How Auto-Rolling contributes to cost efficiency

• How this feature supports continuous growth in the protocol

Key Components

• Price Discovery: How prices are determined during the auto-rolling process

• Reinvestment Mechanism: The process of automatically reinvesting matured positions

• Close-to-Mid Pricing: The pricing strategy used for auto-rolled positions

Benefits of Auto-Rolling

Mitigation of Reinvestment Risk

Reinvestment risk, the possibility of not finding similar reinvestment conditions at maturity, is a common concern with fixed-term investments. The auto-roll feature mitigates this risk by rolling over positions to the nearest market at a close-to-mid price.

Cost Efficiency

By eliminating the need to find another counterparty on the order book for reinvestment manually, the auto-roll feature reduces operational costs. This not only results in cost savings for users but also helps maintain the total value locked (TVL) in the protocol.

Continuous Growth

The auto-roll feature ensures a seamless reinvestment process, fostering continuous growth for users and enhancing the overall value proposition of the Secured Finance platform.

Auto-Roll: Automatic reinvestment of matured loans into the nearest 3-month bucket

In essence, the auto-roll feature is designed to provide an easy, efficient, and smooth reinvestment experience, contributing to the overall user-friendliness of the Secured Finance platform.

Related Resources

• Market Dynamics

• Price Discovery for Auto-Rolling

• New Market Listing and Delisting