Phuture and Notional are offering blood-red crypto markets a shoot of green.
USV, an ERC-4626 compliant vault, utilizes Circle’s USDC stablecoin as its underlying collateral, letting investors earn interest on their holdings.
A vault in decentralized finance () represents an automated yield-generating smart contract. Instead of manually moving money from different projects to hunt for the best yield, the smart contract does the hunting for you.
Investors can deposit their USDC to USV using the Phuture app and receive vault shares representing their investment. The vault shares are auto-compounding and gain value over time depending on the yield forged by the vault.
Phuture has partnered with Notional, a fixed-rate lending DeFi protocol, to power its newly-launched vaults. Per data from Defi Llama, Notional has a total value locked (TVL) of $86.5 million as of this writing.
Investors' USDC deposits are directly used to purchase Notional bonds with fixed-rate returns. “To provide a stable long-term yield, we’ve partnered with Notional,” Phuture’s head of growth Charles Storry told Decrypt. “USV essentially holds a portfolio of fixed-rate Notional bonds with different maturities.”
CEO and co-founder of Notional Teddy Woodward told Decrypt that “When you lend on Notional, your capital isn't 'locked up,' but your rate is locked until maturity. We offer 3-month, 6-month, and 1-year maturities on stablecoins and roll those maturities quarterly.”
When investors want to get their capital back, the vault shares are burned at a later stage. The interest and the collateral deposited are then returned to the investors.
USV has no lock-up period for investors; the withdrawal can be made anytime post-investment.
Fixed rates for the win
A key advantage that Phuture enjoys comes from Notional’s fixed-rate lending protocol. Unlike variable rates on lending protocols like Aave and Compound, Notional’s lending and borrowing rates don’t change over time.
As of this writing, Notional USDC bond yields (similar to Phuture’s USV yield) are 2.5% and 3.25% over three and six months, respectively.
“USV currently does not allocate capital outside Notional’s platform,” Storry told Decrypt .“We do reallocate assets in another case—when our bonds expire and need to roll to the next maturity. USV will always allocate them to the highest yield maturity available on Notional.”
After Phuture, Woodward explained that Notional would also soon be tying up with Index Coop, another passive-investing DeFi protocol, and SpoolFi, a customizable yield-farming app.
Phuture (PHTR), the native token powering the protocol, has gained a modest 2.56% over the past 24 hours and trades at around $0.02, per data from CoinMarketCap.
As of this writing, Phuture has a TVL of slightly above $520,000, per data from Defi Llama.