Sense Finance Partnered with Rari Capital to Enable Zero & Claim Lending/Borrowing.

Sense Finance Partnered with Rari Capital to Enable Zero & Claim Lending/Borrowing.
Image Source: Twitter (@senseprotocol)
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Sense finance announced the building of a permissive onboarding factory atop Fuse, under the technical guidance from Rari Capital.

Today we’re announcing a partnership with @RariCapital to build a permissive onboarding factory atop Fuse and enable Zero & Claim borrowing/lending upon launch of the Sense Protocol.

~Twitter (@senseprotocol)

Note that Sense protocol is a fixed-income protocol that allows the users to manage the risk via future yield trading on the existing yield-bearing assets. Being an open-source software development company, Sense Protocol is known to build products and tools for the Decentralized Finance ecosystem. The protocol has a permissive design through which anyone can create new future yield markets, and the users are provided with wide flexibility to earn and borrow at a fixed rate.

With Rari Capital, users can earn a yield on their tokens and its Fuse protocol anyone can create their environment to expand crypto holdings. Note that Fuse Protocol is an entirely permissionless system for lending and borrowing.

Users can hedge interest rate volatility.

With Sense protocol, users can trade future yields and hedge interest rate volatility on the existing yield-bearing assets. Let's understand how this works.

Firstly, the users can decompose the yield-bearing assets into their yield and principal components with Sense protocol and then can package them behind Zero and Claim, two fixed maturing assets. During their maturity, the yield accrued on the principal goes to Claim holders, and the Zero holders get the principal.

In simpler terms, Claim holders are investing in yield generating activity, and the Zero holders are lending principal to the Claim holders. Now, in return for the lending, Zero holders get a fixed interest rate upfront as a fee in the form of a discount on the Zero market price.

Sense protocol owns a public Fuse pool.

For lending and borrowing of Zeros, Claims and yield-bearing assets, Sense protocol will own a public Fuse pool. Users can also borrow one Zero/Claim against the other one of some different yield-bearing asset because Sense consolidates all the markets in a single pool. This can potentially generate a novel risk-return profile, and the users can leverage Fuse's markets to generate profit from the inefficiencies of the market.

According to the announcement, the new versions of the Sense Portal will soon be released in the market with the new features.

Closing thoughts

Sense protocol can simply enhance the yield-bearing assets by allowing two parties to exchange the interest rate risk with convenient purchasing of Zero and Claim. Also, buying Zero and Claim can prove to be an excellent step towards a flexible capital management strategy for users.