Sense Fixed-income protocol

Sense Finance builds decentralized fixed-income infrastructure on Ethereum. The protocol takes a variable yield-bearing asset, referred to as a "Target," and separates it into two fixed-term assets: a Principal Token (PT) and a Yield Token (YT). These tokens trade on Sense Space, a custom automated market maker built for the protocol.

The protocol supports three primary use cases: buying and holding PTs to lock in a fixed APY with the ability to exit before maturity; taking long or short positions on future yields by buying YTs (long) or PTs (short); and providing liquidity to Sense Space pools to earn a variable APY. Sense describes its design as permissive, allowing anyone to create new future yield markets, and states that the system creates no new debt, has no liquidations, and carries no protocol insolvency risk. The protocol has been live on Ethereum mainnet since March 2022 and has undergone external audits. A blog post on the company site is titled "Sunsetting Sense and Releasing it into the Ether."

Business model

Sense operates a permissionless on-chain protocol on Ethereum in which users mint, trade, and provide liquidity in Principal and Yield Tokens through the Sense Space AMM and the Sense Portal front end.

Latest developments

Recent activity documented on the company site includes integrations with Aura, Idle Finance (including its USDC Junior Best Yield Strategy), Angle Protocol, and Morpho-Aave (USDT and USDC), the public beta of a permissionless adapter UI, and the launch of Rolling Liquidity Vaults. The company also published a 2022 recap and 2023 roadmap, and subsequently a post titled "Sunsetting Sense and Releasing it into the Ether."