Decentralized Counterparty Matches and Automatic Settlement of Interest Rate Swap Through Blockchain's Smart Contracts.

Interest Rate Swap (IRS) is the most vivid application of the principle of comparative advantage in the financial field. The effectiveness of interest rate swap in managing interest rate risk has been widely recognized. However, the traditional interest rate swap transaction is complicated. Meanwhile, there usually exist market risks and credit risks. To alleviate risks and cost, and improve liquidity of interest rate swap, this paper proposes a smart contract based matching platform for interest rate swap of real fiat currency. Smart contracts play a key role for sharing data among participants, which can not be forged or tampered with. In our design, an efficient peer-to-peer counterparty matching method on the chain is proposed. The whole trading process of interest rate swap is carried out on the blockchain, which has higher security. A prototype based on smart contracts running on Ethereum is implemented and validates our design.