Yield Protocol is a DeFi protocol bringing fixed(interest)term, fixed(rate) borrowing, and lending to the Ethereum blockchain. A lot of existing DeFi protocols are based on market-driven variable interest rates; in Yield Protocol, however, these rates are determined by the demand for fyTokens (Fixed-Yield Tokens).
Similar to classical zero-coupon bonds, fyTokens are bought at a discount and then redeemed for the full face value at maturity. E.g., A user purchases a fyUSDC for $0.95; at a later date, the user redeems it for $1.00, guaranteeing a predictable 5% return.
The protocol allows for borrowers and lenders to enjoy a more stable yield within the generally volatile world of crypto-asset yields, thus enabling better financing hedging strategies as fixed-rate loans are prevalent in traditional finance environments.