Introducing Spectra - Open Interest Rate Derivatives Protocol

Hello everyone! Gaspard here, Co-Founder of APWine Spectra.

I am proud to announce that we are entering a new era in DeFi's interest rate derivatives.

Everything we've hinted at with APWine 2.0 now comes together in the bigger picture of Spectra.

Below I'll dive into the why behind the rebranding, showing that APWine 1.0 was just the start of what Spectra can offer. Plus, I'll shed some light on the following milestones.

Goodbye APWine, Hello Spectra

It all started with the simple idea that one should be able to speculate on DeFi interest rates, and a group of French students then created the first yield tokenization protocol. That's where the name ‘APWine’ comes from. It quickly grew into a full-scale company with 12 full-time members working on an advanced IRD protocol and a more comprehensive range of tools.

Choosing to rebrand wasn't easy, but it was clear that APWine didn't cover everything we were building. And let’s not forget about the numerous situations when people in the Web3 community wrongly made the association with wine because of the meta we were using.

At first, the name APWine was fun and catchy, but in the long run, it held us back.

There’s much more o Spectra than just a new name.

This fresh start brings numerous changes on both protocol and product levels that foster permissionless composability with the existing DeFi infrastructure.

The Big Picture

Spectra focuses on a permissionless protocol architecture, a journey towards decentralization, and new financial possibilities, and features a flagship app that lets DeFi users use all the exciting features that the protocol unlocks.

Like Uniswap kickstarted the Cambrian explosion of liquidity pools for any ERC-20, Spectra’s architecture enables this for ERC-4626. This standard for interest-bearing tokens keeps growing, and big names like Aave V2/V3, Morpho, Yearn, and Balancer are already using it.

The Spectra Protocol lets anyone create a pool for any interest-bearing token compatible with ERC-4626, and this will be the leading feature where users or DAOs can create interest rate derivatives environments tailored to their needs.

There is no longer a need for a lengthy governance process like in APWine.

It's worth mentioning that at the moment, DeFillama is tracking over 9000 interest-bearing tokens with a total value of more than $1B. We strongly believe ERC-4626’s adoption continues, and Spectra will serve as a foundation to unlock new financial possibilities for them while also capturing fees for the protocol and liquidity providers.

So, what are these possibilities that a Spectra unlocks for interest-bearing tokens?

  • Fixed Interest Rates (Discounted Tokens)

  • Variable Rates (Yield Trading)

  • Supercharged Liquidity Provision with up to 4 fee streams

  • Yield Marketplace (Buying/Selling of specific yield tranches)

  • Upfront Yield

  • Lending/Borrowing

*Given the Beta stage, not all features are available today in Spectra’s flagship app.

Here's a rough timeline of events coming to the Spectra Ecosystem.

Today, we're launching the Beta to the public, which lets us gather more feedback as we prepare for the full release of the app.

Give it a try here →

Next up is Yield Marketplace, a tool for more advanced users and organizations that allows for exchanging specific yield timeframes. This granular approach will position Spectra as the only place in DeFi to create custom yield strategies.

Read more about our unique design for tailored yield strategies here (with IRL examples!)

A word on composability & Spectra SDK

Even though the first V1 aimed to be composable, the reality was more complex in practice. Taking a lesson from this, Spectra is now fully compatible with the latest token standards, allowing permissionless protocols to integrate seamlessly and builders to participate in the development of the Spectra ecosystem.

With the SDK coming around the full app rollout, developers will have a full frontend library to interact with contracts.

Interfaces, relayers, aggregators, exchanges, asset-focused marketplaces, or risk trackers can all be built on Spectra.

I believe that collaboration and new ideas from outside the founding team are crucial. This is how we'll truly unlock the potential of Spectra and DeFi's interest rate derivatives sector.

Pillar Features of Spectra Protocol
Pillar Features of Spectra Protocol

On Token & Protocol Fee Models

APWine introduced the $APW token a couple of years back. It has been integral in fostering liquidity pools, fueling community initiatives and shaping governance decisions.

As we enter the new chapter, $APW will remain at the core of the Spectra ecosystem.

As Spectra picks up steam, we're pondering a shift to a new ticker.

This new chapter will allow us to update core mechanisms and integrate advanced standards and optimizations into the token. This 'tokenomics refresh' will occur in stages, starting with the launch of Spectra, and will be coordinated with the DAO.

During this transition, we are committed to ensuring stability and continuity for all APW stakeholders and those who have their APW locked up.

In the meantime, we're crafting governance proposals tailored to align incentives better and enhance our governance model to match the protocol's growth. Expect to see these proposals for community review and input in the near future.

Now, let’s talk about fee models planned for Spectra.

The key innovation areas in protocol fees models include:

  • Tokenization Fee - We chose not to have a custom AMM in Spectra, instead relying on the efficiency and composability of existing solutions (starting with Curve). This means we won't be taking fees directly from these AMMs. The protocol will benefit from its "usability” by charging a fee for the tokenization process.

A portion of the protocol fees will go back to the pool creator, which should encourage the creation and organic promotion of the pools.

  • Withdrawal Fee - Our updated design includes a fee for LPs when they withdraw, which decreases linearly as the vault's expiry gets closer. This design encourages LPs to keep their positions in the vault for longer, penalizes farmers who only enter and exit for the rewards, and helps the protocol gather a wide range of assets and generate passive revenue.

  • Trading Fee - Applied to trades on Yield Marketplace

In addition to Tokenization and Withdrawal fees, we have several other fee-generating mechanisms in the pipeline.

We're also actively working on defining the allocation structure to decide how these fees will be initially shared among LPs, DAO, and token stakeholders. These protocol fees will be iterated with the community.

Expect a dedicated article where we elaborate more on fees and protocol revenue models.

Moving on, I'd like to say a few words on Spectra's path to decentralization.

Path to decentralization

Achieving decentralization isn't a sprint; it's more like a marathon. The rules of the game are still being figured out and tested thoroughly. In the coming weeks, we will share a roadmap that lays out the milestones we aim to achieve and how to get there with the community.

Lending & Borrowing

Spectra's Principal Token represents the right to a fixed amount of the underlying asset (like USDC) when it expires. This opens up opportunities for lending markets where Principal Tokens are used as collateral.

Though it's still a work in progress, I'm thrilled to let you know that we've teamed up with the biggest players in the lending sector to bring such a platform to Spectra Ecosystem. The ability to use Principal Tokens as collateral is a natural next step in Spectra's evolution.

What Happens to APWine & $APW?

As we transition to the new brand, Spectra, I want to assure our community that existing APWine websites and services will remain fully functional for the foreseeable future. We will carefully communicate each transition step in future announcements.

Users can continue accessing and exiting positions on until we phase it out.

Closing Remarks

Spectra is more than just a rebranding of APWine; it is a powerful manifestation of our vision for the future of DeFi. It carries the lessons learned, experiences gained, and the continuous drive for improvement.

To the APWine community, thank you for your persistent trust and support.

To those just discovering us, we invite you to explore what Spectra has to offer and join us in shaping the future of decentralized finance.

That's it for today! Keep an eye out for updates at @spectra_finance

Gaspard and Team

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