Overview

Motivation

With the rise of LSD's like stETH, frxETH, rETH, and many others, one piece that's missing from the picture is tokenizing the ETH yield APR. Holders of LSD's may want to sell their future yield for an upfront payment, shorting the future interest rate. On the other hand, some may want to bet on the ETH yield rising in the future. This is the problem that Bonding Finance solves.

Bonding Finance allows users to separate their LSD token into 2 parts, an intrinsic part that represents 1 ETH (Deposit token or dToken) and an extrinsic part that represents the future yield in perpetuity (Yield token or yToken).

Immediate roadmap

We launching Bonding Finance with perpetual bonds to get users familiar with the dTokens and yTokens and the mechanisms of the protocol. Perpetual bonds are a more user-friendly product since there is no lockup on deposited tokens and can be redeemed at any time.

Soon afterwards, we will roll out fixed-duration bonds, which allow LSD holders to hedge their yield. Fixed duration bonds require a lockup for a set expiry date and redemptions can only occur once the bond matures.