Thread by @mrjasonchoi

Fixed income: the next big opportunity in DeFi?

A thread 👇

1/ While a nascent vertical in DeFi, fixed income is a *massive* market in legacy finance.

The estimated size of global fixed income instruments today is more than $120 TRILLION.

2/ Fixed income is a broad term referring to everything from treasury bills and corporate bonds.

The basic idea is financial instruments that generate a fixed interest to holders.

Contrast this with lending on @AaveAave, where your interest is variable.

3/ Today, the current fixed income landscape in DeFi can be roughly segmented into the following categories:

4/ Tranche products: @saffronfinance_ @Barn_Bridge create different risk tranches based on existing lending protocols like @compoundfinance and @AaveAave.

Those who want a lower, stabler interest yield are subsidized by users who in exchange may earn a higher yield.

5/ Zero coupon bonds: @yield @NotionalFinance are inspired by the idea of zero coupon bonds.

These are instruments with fixed maturities and fixed yield, where holders know exactly what they will earn.

6/ Interest rate swaps: @pendle_fi @Horizon_Fi Element and Swivel tokenize your interest streams.

That way users can trade their tokenized yields to speculate and hedge.

7/ For those who want to learn more, @tn_pendle and I break down some of the above, and how Pendle helps users lock in rates for their stablecoins today.

Check out our 30-minute convo here:

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