Factor
@factorfi
Open financial infrastructure encourages innovation where everyone wins. 2024 was a breakout year for DeFi yield markets lead by @pendle-fi. By splitting yield bearing tokens into fixed (PT) & variable (YT) portions, a new DeFi primitive was introduced. The explosion of ETH restaking and the points meta (Eigenlayer, @renzoprotocol, Kelp) created the perfect conditions for yield hunters to explore this new primitive. Being open and permissionless, new PT money markets (Aave, Silo, Compound) enabled users to collateralize PT and borrow the underlying token. By swapping (@openoceanglobal) borrowed tokens for more PT, users could loop their positions to capture leveraged fixed yields with minimal liquidation risks.
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Factor
@factorfi
PT holders could also provide liquidity to various AMM DEXs (Camelot, @balancer, @uniswap) to profit from potential trading fees. Yield farming opportunities also arose as incentives for long term liquidity also started to be distributed. Pendle emissions also resulted in the creation of a separate bribes market to optimize emission rewards (Penpie, Equilibria). Yield optimizers (Beefy) abstracted all the complexities of automating a yield strategy. By just depositing into vaults, users could easily auto-compound their yields without all the strategy overheads. This is why DeFi composability matters. Imagine being able to drag-and-drop any token across any protocol and sharing your strategies in minutes. We're super excited to continue making @arbitrum and the wider DeFi ecosystem more composable in 2025!
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