The Spectra protocol and its flagship interface are now live - setting a new standard for DeFi’s interest rate derivatives landscape.

Spectra becomes DeFi’s first permissionless interest rate derivatives protocol, allowing any individual, DAO, or company to participate in the rapidly growing yield tokenization sector.

With Spectra, anyone can launch a pool for yield derivatives (Principal & Yield Tokens) and unlock new financial possibilities, such as fixed rates, yield trading, or instant yield.

Following Uniswap’s permissionless pool creation design for any ERC-20, Spectra allows this for the ERC-4626 vault standard, which, as of June 2024, collectively amounts to over $9B TVL.

Holders of interest-bearing ERC-4626 tokens can use them to create a Spectra pool and earn additional yield from swap fees, 3rd party incentives, and the protocol’s APW emissions to pools. All of this is achieved while staying entitled to the native yield of the ERC-4626.

Visit Spectra’s flagship interface: app.spectra.finance

Setting a new standard for permissionless interest rate derivatives.

Spectra introduces an end-to-end permissionless design, setting a new standard for yield tokenization. Previously, projects and individuals had to contact yield tokenization platforms and negotiate pool creation manually.

With Spectra, anyone can start a pool by simply providing three ingredients: an interest-bearing token of any amount, a maturity date, and a target APY. Once created, the pool powers the yield derivatives swaps.

Core protocol contracts: https://github.com/perspectivefi/spectra-core

Enhanced Utility for Interest-Bearing Tokens

Spectra enhances the financial utility of ERC-4626 tokens, enabling functionalities such as:

• Fixed Rates: Stakers, farmers, or lenders can hedge from APY volatility and lock in future earnings.

• Yield Trading: Traders can speculate on the fluctuations of the APY rates of interest-generating tokens.

• Pool Creation: Liquidity providers can start a pool to earn fees and additional rewards.

Developers

Spectra’s flagship app is just the tip of the iceberg of what’s possible with Spectra’s protocol and its primitives. We invite builders and researchers to explore the documentation and get inspired by some of the following use cases.

Permissionless Principal & Yield Tokens

Builders can integrate and leverage Spectra’s primitives for their needs.

Principal Tokens offer fixed value at maturity and can be used in various narratives, such as fixed savings, discounts, or yields. For example, existing yield platforms can leverage Spectra’s infrastructure to allow users to fix APY on their native interfaces.

Yield Tokens offer exposure to the APY evolution of their interest-bearing token. For example, YTs can be at the core of next-gen trading dashboards or used for sophisticated yield strategies.

Custom-made Curve parameters

Under the hood, Principal Tokens are paired against Interest-bearing Tokens (e.g., aUSDC) in Curve AMM pools. With Spectra’s custom-tailored parameters, leveraging this pool model allows for efficient PT<>iBT swaps and redemptions with negligible impermanent loss.

With Curve being plugged anywhere in DeFi, PT<>iBT pools can be implemented and combined with yield strategies, further enhancing the existing project’s APRs.

The core protocol mechanisms can be abstracted in various ways, such as fixed savings, discounted assets, upfront yield, instant yield, and other narratives that have yet to crystallize.

Governance

During the Spectra’s building phase, several proposals have passed that influenced Spectra’s governance and emissions:

SGP0 - Snapshot Setting the additional APW distribution to lockers to 10800 APW per month.

SGP1 - Snapshot Initiating APW reward distribution to the new APW/ETH 1% Uniswap V3 pool on Ethereum.

SIP0 - Snapshot Updating veTokenomics & setting protocol fees to LPs at 0% during the protocol’s bootstrapping phase

SIP1 - Snapshot The introduction of a Spectra Gauge Request (SGR) allows for adding or removing a gauge for a specific Spectra pool.

The APW Token

The APW token remains at the core of the Spectra Protocol.

Spectra’s updated governance model allows stakeholders who lock APW for veAPW to vote on proposals and gauges. In return for helping gauge protocol emissions, they can earn a share of third-party incentives and protocol/pool fees. Users will soon be able to vote on gauges when the first pools are whitelisted by the Spectra DAO via SGR.

After the protocol bootstrapping phase, two proposals will be put on the governance forum to enable a protocol fee on swaps and redirect the fee to veAPW voters.

Audits

After a year of extensive research and development, Spectra's protocol core contracts have undergone a public audit by Code4rena and a private audit by Pashov Audit Group.

Both audits found no critical or high issues, and the auditors appreciated the high quality of the code.

Code4rena report:
https://code4rena.com/reports/2024-02-spectra

Pashov Group report:
https://github.com/pashov/audits/blob/master/team/pdf/Spectra-security-review.pdf

What’s Next

This release marks the first step in deploying Spectra’s permissionless core primitives.

Many upcoming protocol and interface enhancements are already being developed. These include addressing liquidity fragmentation across assets and manual rollovers, among other improvements.

Spectra will also become AMM-agnostic, allowing LPs to choose the right AMM to power pools that suit their needs.

Spectra’s Yield Marketplace, previously hinted at, has an interactive prototype ready.

At the interface level, users will be provided with more trading instruments, such as limit orders. New L2 deployments and ecosystem integrations, including lending markets, UI improvements, and innovative strategies, are also on the horizon.

The direction is clear, and the exact steps are shaped by a trial-and-error approach and a feedback loop with each iteration.

A word on business development

Spectra’s core team has been actively working with DeFi teams during the development phase, showcasing how Spectra can enhance their ecosystems. The proactive engagement and organic interest from various projects have led to several integrations already being in progress.

Anyone can suggest an improvement or integration and become influential in Spectra’s development at the protocol or interface level via gov.spectra.finance or by starting a community discussion on Discord.

About Spectra

Spectra is an end-to-end permissionless protocol infrastructure and a flagship app for DeFi’s interest rate derivatives.

Visit spectra.finance

Join the Spectra community on Discord | Follow Spectra on Twitter/X