September 7, 2019 Paradigm researcher releases whitepaper for a zero-coupon overcollateralized bond, interoperable with existing DeFi protocols.

Describing a class of tokens termed yTokens, the protocol would enable a fungible market for fixed-term secured lending on-chain. Bonds are created for any ERC-20 asset by depositing collateral in a smart contract, then issuing fungible bonds redeemable for that collateral at a fixed date. These bonds are expected to trade at a discount to their redeemable value, with the difference inferring an interest rate for the remaining time-to-maturity. Implementation of this design could be useful in many DeFi contexts, offering alternative forms of lending, leveraged trading, and defining an asset’s yield curve.