Quarterly Rolls

Quarterly Rolls

Every three months, the reference time used to calculate the active liquidity pool maturities rolls forward three months.

This happens when the current block time surpasses what was the three-month maturity. Rolling the reference time forward updates the active maturities and rolls the liquidity pools forward as well.

When this happens, all active liquidity pools become inactive and new pools are instantiated at the new set of active maturities.

For example, Let’s say you have a bond that starts today. Consider the reference time as a quarter (3 months) ahead of the bond inception date. If the current time is equal to this reference time, it means the 3 Month bond is going to mature and the system would transit to a state where the 6-month bond will be liquid and would trade in the 3-month fCash market. At the same time, the 1-year bond will not be liquid as there is no 9 Month bond, and a new 1-year bond fCash market would get created.

If a quarter passes with the above situation, the illiquid bond that transited from 1-year maturity to a 9-month maturity would be liquid and would be tradable in a 6-month fCash market pool.

The nToken account automatically withdraws all its liquidity from each inactive liquidity pool and distributes the sum total of its cTokens to the newly active liquidity pools per the nToken’s deposit shares. This ensures that the new liquidity pools will be liquid and tradable from the moment they open up.