Fixed Interest/Yield
Fixed yield for LPs and Fixed Interest rate loans for Leveraged Traders.
On the other side of variable rate liquidity makrets, lendOS offers a permissionless yield trading for LPs and Traders.
The core concept of this lendOS service consists of:
Tokenize Asset's Yield lendOS splits and underlying asset into two components: YT (yield token) and IT (interest token). Both tokens have the same rate and expiration date:
YT has fixed yield for LP provider;
IT has fixed interest rate for Traders.
By creating YT and IT liquidity provider locks an underlying asset into lendOS vault for Traders to borrow this funds into their strategies. In order to borrow an underlying asset, Trader needs to buy a IT that represents a fixed interest rate loan with an expiry date. YT and IT are traded on lendOS AMM (each IT and corresponding YT is a position in AMM).
Expiration:
LPs and Traders rather swap back their corresponding YTs and ITs to a one holder, burn them and unlock underltying asset;
Or Trader's position is liquidated on the expiration date in order to return the underlying asset back to LP.
Such approach brings interest derivative market into DeFi, making it accessible to all.
By creating a yield market in DeFi, Pendle unlocks the full potential of yield, enabling users to execute advanced yield strategies, such as:
Fixed yield (e.g. earn fixed yield on various assets: USDC, USDe, ETH, stETH, cbBTC etc);
Fixed Interest (e.g. bet on stETH yield going up by purchasing more yield).
Last updated