Derivio
  • Introduction to Derivio
    • Use Cases
    • Architecture
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  • Trading
    • Perpetual Futures
      • Universal Margin System
      • Funding Curve
      • Global Funding Rate
    • Prediction
      • Payout Curve
      • CFMM Rediscovery
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  • Providing Liquidity
    • Super Derivatives Vaults
    • Market Neutral Liquidity
    • Interest Rates & Bonds
      • Use cases
  • Token Ecosystem
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  1. Providing Liquidity

Interest Rates & Bonds

Coming soon: Manage your exposure with interest rates & bonds

PreviousMarket Neutral LiquidityNextUse cases

Last updated 1 year ago

As of 2021, the size of the bond market is estimated to be at $119 trillion worldwide. Derivio is positioned to be the pioneer that brings bond products to the DeFi landscape through its game-theoretical design. Providing liquidity on Derivio is effectively holding a market-neutral index while generating yield from market making & fee sharing. As the yield can be highly profitable, it also comes with uncertainty. Derivio's interest rate & zero-coupon bond markets allow users to have ultimate control over their portfolio, while providing powerful legos for building novel DeFi strategies such as pseudo-fixed income products.

DLP = rDLP + bDLP

One DLP can be used to mint one rDLP and one bDLP. rDLP represents revenue, and bDLP is effectively a zero-coupon bond.

  1. Stake rDLP, locked for 7 days, to share 7 days revenue

  2. Stake bDLP, locked for 7 days, receive 2% of the staked rDLP

  3. By staking 1 rDLP, 7 days later, less than 1 rDLP + 7 days revenue can be claimed

  4. Rebalancing is done every hour

  5. By staking bDLP for a long period of time, a bDLP staker continuously gets rDLP, so bDLP converges back to DLP, which can be redeemed for the underlying asset.

*: Note that the period (i.e. ~1 year) in the pictures is flexible to user's choices.

- Why would I buy rDLP?

Notice that rDLP has zero delta exposure. For yield-hungry investors, rDLP offers the most capital-efficient way of doing (leveraged) delta-neutral farming without the risk of liquidation.

- Why would I buy bDLP?

For conservative investors who favor passive investment, bDLP offers the most capital-efficient way of entering principal-protected passive investment opportunities over a variety of indices.

Read more here & Use Cases:

The separation allows different kinds of traders to participate: those who want yield from the platform can buy rDLP from the market, and hence enjoy a leveraged position, whereas the bond investors will be able to lock in a fixed investment return by buying bDLP. In the TradFi world, rDLP is the variable yield, and bDLP is a . And the game theory behind the mechanism design pushes the corresponding prices of yield and bond to converge to the Schelling point — that is, rDLP represents the yield, and bDLP represents the principal ownership. FAQ:

zero-coupon bond
Derivio: Interest Rate and Index Derivatives MarketDerivio on Notion
Zero-coupon Bond*
Interest Rate*
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