Earn Up To 50% on ETH With Ondo by DefiDad

Before we get started, a reminder that this is not a recommendation or endorsement to buy any tokens mentioned in this tutorial.

Over the last few years, DeFi has been defined by opportunities dealing in variable rates. One of the new applications in DeFi (but old in terms of TradFi) that we’re hopeful to see grow is fixed rate yield. In this DeFi vertical, you’ll recall I’ve written about BarnBridge, which is one of the most promising and adopted protocols to date.

More recently, I learned about Ondo Finance, which allows DeFi investors to trade the risk and reward balance of pooled assets. The mission of Ondo is to give lenders the ability to tap into DeFi with forecastable yield and mitigated downside.

Put simply, Ondo is launching new vaults for fixed and variable yield positions, where the fixed yield tranche receives a fixed percentage over its initial investment vs the variable tranche receiving all excess returns after the fixed yield receives payout (or paying what’s necessary to make up the shortfall to fixed yield lenders).

Here’s an example of how Ondo works:

• Imagine an Ondo vault backed by the USDC-ETH liquidity pool on Uniswap, with the fixed yield depositors contributing USDC and the variable yield depositors contributing ETH.
• Fixed yield depositors are promised 10% APY over a 1 month duration
• Next, we have a subscription period where fixed yield depositors make subscription requests with USDC and variable yield depositors deposit ETH during a one week window. 
• At the end of the subscription window, USDC and ETH are pooled