The Rise of Fixed Rate DeFi Products
Pendle's TVL increased by $4 billion in three months, and the utilization rate of Notional's fixed-rate lending pool jumped from 18% to 67%
The issue with floating rate DeFi has always been: you deposit with an 8% APY, and it might drop to 2% after two weeks, making it impossible for institutions to plan their finances.
Fixed rate products tokenize future yields, allowing you to lock in returns in advance.
Pendle uses AMM for yield trading, while Notional directly offers fixed-term lending.
However, liquidity is still a problem. Pendle's PT-stETH pool depth is only one-tenth of Curve's, and large trade slippage can eat up 0.3% of the returns. Moreover, fixed rates essentially bet against future market interest rates; if ETH staking yields suddenly surge, your locked 4% will incur losses.
Traditional finance manages cash flow with fixed rates, and DeFi is now filling this gap.
Pendle's TVL increased by $4 billion in three months, and the utilization rate of Notional's fixed-rate lending pool jumped from 18% to 67%
The issue with floating rate DeFi has always been: you deposit with an 8% APY, and it might drop to 2% after two weeks, making it impossible for institutions to plan their finances.
Fixed rate products tokenize future yields, allowing you to lock in returns in advance.
Pendle uses AMM for yield trading, while Notional directly offers fixed-term lending.
However, liquidity is still a problem. Pendle's PT-stETH pool depth is only one-tenth of Curve's, and large trade slippage can eat up 0.3% of the returns. Moreover, fixed rates essentially bet against future market interest rates; if ETH staking yields suddenly surge, your locked 4% will incur losses.
Traditional finance manages cash flow with fixed rates, and DeFi is now filling this gap.