Pendle Launches Boros: Bet on Bitcoin and Ether Funding Rates

Pendle Finance has introduced Boros, a new platform built on Arbitrum, offering users a direct way to trade the funding rates of Bitcoin (BTC) and Ether (ETH) perpetual markets.

How Boros Works

Boros enables users to take long or short positions on funding rate exposure through “Yield Units” (YUs). These YUs function similarly to Pendle’s existing Yield Tokens. Each YU represents the realized funding yield on a single unit of notional, like 1 ETH or 1 BTC, until its expiration. This allows traders to speculate on or hedge against changes in funding conditions on major derivatives exchanges like Binance.

Initial Launch and Future Plans

The platform launched with capped parameters of $10 million in open interest per market and 1.2x leverage. Pendle plans to add more listings, including SOL and BNB, and integrate with platforms like Hyperliquid and Bybit. They are prioritizing risk management and system validation by pacing growth.

Hedging and Liquidity

Boros provides a hedging tool for traders who pay or earn funding fees on centralized exchanges (CEXs). Traders expecting funding to decrease can short YU, while those anticipating a spike can long YU.

Liquidity provisioning is also a key focus. Boros Vaults allow liquidity providers (LPs) to supply capital to the system and earn swap fees, PENDLE incentives, and potentially profit from favorable shifts in the implied APR. These vaults are designed to mirror Pendle’s fixed yield vaults, aiming to bootstrap protocol-side liquidity in the early stages.

Incentives

PENDLE incentives will be distributed pro rata based on order flow and notional filled. Pendle also intends to introduce an open referral program and fee rebates in the near future.

Key Takeaways

• New Way to Trade Funding Rates: Boros offers a novel mechanism to speculate on or hedge against BTC and ETH funding rates.
• Arbitrum-Based: Built on Arbitrum, taking advantage of its lower fees and faster transaction times.
• Liquidity Incentives: Vaults and PENDLE incentives are in place to attract liquidity providers.
• Risk Management: Capped parameters and a paced growth strategy are designed to prioritize risk management and system validation.