In early 2021, after several months of working on testnet releases, we launched a beta version of the APWine protocol on the Ethereum Mainnet.
At that time, the primary motivation behind the project was to help DeFi farmers to protect their crops from APY volatility.
However, as we talked to our first users and received genuine feedback on the concept, we realized a strong need for more sophisticated tools for all-things interest rates in DeFi.
After countless hours of coding, researching, and testing, the 1.0 version of the APWine protocol was launched in December 2021 with a broader set of in-app tools.
For the first time in DeFi, users could trade interest rate derivatives, get future yield in advance, or hedge risk by fixing APRs. All of that was made possible with our invention of the Principal Token & Future Yield Token primitives.
The last two years allowed us to take the first steps towards building an active community and governance processes, backed by a solid and effective team while gathering concrete feedback thanks to connections with builders via hackathons and IRL events.
Today, we’re delighted to introduce the next iteration of the protocol code-named 2.0 - a comprehensive redesign that takes key learnings from previous versions, making it a truly modular and inertial protocol for interest derivatives.
Before we continue, a word on the current state of interest rate derivatives in DeFi.
Over the last two years, we’ve witnessed a few attempts at creating yield markets & protocols, although all of them struggled to get meaningful traction. Most of them got stuck at the intersection of low liquidity, complex mechanics, and poor integrations of the yield-bearing strategies.
Overcoming these obstacles is critical to bringing the staggering $8.6 trillion interest rates derivatives market from TradFi to DeFi.
With maturing DeFi and the ever-growing interest in yield-generating opportunities (9500 yield-bearing tokens and counting | Defillama), we are confident that interest rate derivatives will flourish in decentralized finance.
Below we present the core advancements coming with the 2.0 version of the protocol & the flagship app:
🟣 Yield Token
🟣 L2 P2P Yield Market
🟣 Supercharged Liquidity Provision
🟣 Built-in Zaps & Bridges
🟣 ERC-4626, 2616 & EIP-5095
🟣 Revenue models
🟣 UI Revamp
🟣 Yield Token & L2 P2P market - a token design on top of which we designed a new market primitive, mainly the P2P L2 Yield Market and the possibility of generating Future Yield Tokens (FYT) of flexible durations, removing previous time modularity constraints.
Until now, due to the expiration and limiting periods of FYTs, it was complicated to use, leverage, and provide liquidity with FYTs.
The Yield Token model is completely free of these constraints thanks to custom durations and features.
For example, a YT token can have a 1-year duration. Out of it, you can easily extract 'January' & 'February' and sell them immediately on the L2 P2P yield market while still being entitled to the future yield accrued between March and December.
The flexibility of the YT mechanisms paired with the efficiency & modularity of the yield market constitutes a significant step for future integrations allowing for precise yield strategies.
The Future Yield Tokens will continue to exist as they encapsulate yield during two points in time, i.e. a time segment of the Yield Token. Plus, 2.0’s core architecture will still allow for the permissionless creation of FYTs of any duration and form down to a single day.
🟣 Supercharged Liquidity Provision
Becoming an LP on APWine 1.0 is complicated even for advanced defi users. In 2.0 it will be done flat simply via vaults, where only one asset is required to get started. This form can also be regarded as single staking.
Vaults will have the functionalities of redeploying the liquidity for the user at the expiration of the future thus avoiding complex UX and liquidity fragmentation.
In 2.0, liquidity providers, as opposed to 1.0, won’t have to choose between either APWine’s LP yield or the native platform’s yield. Liquidity providers will be exposed to yield of 1) interest-bearing tokens 2) AMM fees 3) incentives & rewards.
This will be possible by removing any underlying token in the collateral needed for liquidity providers to keep only yield-generating assets (iBTs).
With this improvement, LPs can be sure that their capital is deployed to the max. efficiency while generating additional yield in the most optimized way.
🟣 Built-in Zaps & Bridges
The 2.0 brings the user experience in APWine’s flagship app to another level. By removing the friction with the need to leave the app to get a specific token, users will have a shorter and safer path to use protocol for their needs.
Zaps enable instant user onboarding by allowing the utilization of any token from their wallet to fix APR or buy directly into interest derivatives via AMM.
For example: fixing rates on staked $PSP will no longer require holding $PSP. Instead, users can do it with any other token in their wallets, like $ETH or $LINK.
Zaps complete the swap behind the scenes, and the best thing about it is that it all happens in one transaction while providing users with fair rates.
Bridges tackle the crucial challenges we had to work on since the V1. In combination with zaps, a user will not only be able to use 2.0 with any token but also transfer it from L2 in one transaction without the need to leave the app.
With these two features alone, the ease of use of the protocol via the flagship dapp will drastically improve and increase usage.
🟣 Vaults Standards: 4626, 2612, & 5095
With the latest widespread of various ERC & EIPs standards in DeFi, protocols can now 'talk' to each other without requiring developers to create time-consuming adapters and custom solutions.
For 2.0, we have chosen the three standards created by a handful of prominent Web3 wizards from protocols and organizations such as Yearn, Paradigm, and Ethereum Foundation.
ERC-4626: A standard for tokenized vaults lowers the integration effort for yield-bearing vaults. Currently supported by the likes of Yearn, Alchemix, and Balancer will make our protocol an effortless ‘money lego’.
ERC-2612: Tackles one major problem; the lack of abstraction in the EIP-20 [approve method]. Its implementation allows users to sign and permit token transfers in one transaction, vastly improving the protocol's UX.
EIP-5095: Designed to be the standard for Principal Tokens, allowing easy integration of 2.0's Principal Tokens across DeFi.
🟣 Revenue models
One of the core focus of the 2.0 are implementations of various revenue-accruing mechanisms. The research efforts went into exploring the following areas:
Fees on the yield of the iBTs
Performance fees on the vaults
These mechanisms will be implemented in the 2.0’s code from day one and proposed to the DAO in due time, followed by their on-chain implementations with the value of the fee decided by the DAO.
Stability and profitability for the DAO are a core focus in this new protocol iteration.
Moreover, our tokenomics are being completely reworked to better fit the new protocol version and ever-evolving DeFi.
With these key improvements listed above, we aim to create DeFi’s #1 protocol for fixed and variable interest rates and debt derivatives.
The planned release of 2.0 is in a few months. We reserve the right of announcing a precise date later to remain flexible in the timeline. We want to take the time to only deploy new products that we are absolutely confident about.
At launch, users will be able to utilize protocol advancements via the new flagship dapp. Some of the features might be available shortly after the mainnet release.
We will also launch a closed beta for a limited number of testers, so make sure to follow our Twitter for announcements on that matter.
APWine is the pioneering protocol for tokenized yield in Web3. Users can leverage the protocol to fix interest rates, speculate on APR evolution or receive future yield in advance (even today).
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