Pendle
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Pendle

Pendle x Rari Fuse Pool

Pendle Fuse pool is live!

Each Rari Fuse pool is an isolated lending market. The Pendle Fuse Pool will support the following assets:

  • OT-cDAI-29Dec2022
  • OT-aUSDC-29Dec2022
  • DAI
  • USDC

This frees up OT holders’ capital by allowing them to deposit OT into the Fuse pool and borrow against it.

One interesting aspect this enables is a yield hedging cycle for leveraged shorting of yield.

Yield Shorting

Yield hedgers can lock in a 12% yield with Pendle now by depositing aUSDC to mint its YT/OT and selling YT away, earning the capital immediately. (Check out a detailed case study on how a user locked yield here.)

Instead of hold-till-maturity, this new Fuse pool allows OT holders to borrow USDC against OT prior to the contract expiry.

This borrowed USDC can then be deposited into the USDC pool on Aave to obtain aUSDC, mint YT/OT and sell YT again. This loop can be repeated for users to enter a leveraged yield hedging position.

Users must be aware of their collateral position for liquidation. Your collateral will be liquidated if it falls below the loan-to-value (LTV) ratio of your borrowings.

For example, if the LTV ratio of the supplied asset is 60%, users can borrow $0.6 for every $1 deposited.

How to deposit OT into the pool

  1. Visit the Pendle Fuse pool.
  2. Select the asset you want to supply into the pool.

3. Enter the amount to supply into the pool.

4. Turn on the “Enable As Collateral” switch to use the asset as collateral in order to borrow other assets against it.

5. Click “Confirm”. You will need to approve the contract if this is your first time interacting with the contract.

6. After the approval transaction is completed, you will need to approve a second transaction to mint fsToken which represents your share in the pool.

7. Afterwards, your assets will be supplied to the Fuse pool. You will now earn interest and you can also borrow other assets if you enabled the supplied asset as collateral.

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