On-chain lending protocol with interest rate discovery.Dan Robinson from Paradigm came up with a protocol to issue zero-coupon bonds on Ethereum (called yTokens).
It works like this:
To "borrow" DAI: deposit ETH, mint (overcollateralize) yDAIs for the desired term and sell them.
To "lend" DAI: just buy yDAIs for ETH for the desired term.
yDAIs are fungible so they can trade permissionlessly on Uniswap.
The big implication of this design is that a decentralized yield curve naturally emerges for the price yDAI trades at for different durations (as it pays off $1 at term, it should trade at discount to account for the time value of money).
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