For a long time, the funding rate was just a supporting role, always regulated by the market, passively accepted.
Never expected that one day funding rates could also be separated out, becoming an independently tradable asset—this thing was indeed created by Pendle.
@pendle_fi's latest lab project—Boros @boros_fi, a platform focused on funding rate trading, has just launched.
After spending half a day researching, I found that it is a true 'interest rate DEX'. If played well, this thing has great potential.
Below, I will try to explain the significance of Boros and how to play it in simple terms—
1️⃣ Core mechanism of Boros: How to tokenize funding rates?
Anyone who has traded contracts knows that the funding rate is the core mechanism for adjusting long and short balances in perpetual contracts:
Positive rate → longs pay shorts
Negative rate → shorts pay longs
The problem is, it has always been fluctuating, like farmers relying on the weather for rain, sometimes more, sometimes less, making position costs full of uncertainty.
Boros's approach is to forge this 'floating rainwater' into a tradable 'yield asset'.
The core unit of Boros is called Yield Units (YU).
You can understand it as: holding 1 BTC perpetual contract, the cash flow of funding rates receivable during a certain period. For example:
Holding 1 YU-BTC (1 month) is equivalent to buying the funding rate income that a BTC perpetual contract can generate in the next month.
Going long YU = paying a fixed APR (Implied APR), obtaining the floating funding rate income of the underlying asset. Actual rate higher than fixed rate → profit; vice versa results in loss.
Going short YU: receiving a fixed APR, paying the floating funding rate cost of the underlying asset. If the actual rate is lower than the fixed rate → profit; vice versa results in loss.
Settlement frequency is synchronized with the exchange, and after expiry, the value of YU returns to zero, with profits and losses settled automatically.
An example makes it more intuitive:
Assuming the current price of $BTC is $100,000, and the annualized funding rate on Binance is 6%, you went long 10 YU-BTC on Boros at a YU-APR of 6%;
8 hours later, the funding rate rose to 8%;
Your earnings = Nominal Value × (Actual APR - Fixed APR) × Time = 10 × 100,000 × (8% - 6%) / 365 / 3 = 18 USDT
You will find that the profit and loss here are unrelated to the price of the underlying asset, it is purely a game of interest rates.
2️⃣ Why have Boros? Where is its market?
You might ask: why trade funding rates when trading coins? This sounds like it has no market!
You are completely mistaken. The answer is simple: the volatility of funding rates is much more violent than you think, and it is the norm.
🔸 The funding rates for BTC/ETH perpetual contracts often fluctuate between -3% and +6%.
🔸 In high-leverage structures, a 3% interest differential can amplify to 50%+ returns.
🔸 For stablecoin protocols (like Ethena), high-frequency arbitrageurs, and pegged asset minters, the funding rate is the core source of profit.
In the past, the way to handle funding rate fluctuations was to either bear it hard or use complex multi-legged hedging (spot + perpetual + delta-neutral + OTC settlement)—the threshold was too high, ordinary people simply couldn’t play.
Boros is the first to 'securitize' funding rates, just like trading the expected trends of US Treasury yields:
You think the funding rate will rise in the future → go long YU, locking in the low APR you need to pay now.
You think the market sentiment is turning bearish, and the funding rate will drop → go short YU, locking in the high APR you need to receive now.
3️⃣ Who is suitable to participate in Boros?
In fact, based on Boros's mechanism, it is clear that this is not a platform aimed at speculative novices, but should be very attractive to the following types of people:
1) Spot + futures traders: hedge funding rate costs/income
For example, you opened 100 perpetual long positions on BTC on Binance, and seeing the funding rate rise from 0.1% to 0.3%, you want to lock in the interest expense.
→ Then you can go long YU-BTC on Boros, locking in a fixed APR to hedge against this cost fluctuation.
Conversely, if you short BTC hoping to earn funding rates but are afraid that the market will rebound tomorrow and funding rates will drop, you can short YU-BTC to lock in profits.
The essence of this approach is: turning the floating risk of funding rates into predictable costs.
2) Interest arbitrage traders / DeFi structured players
Boros can also implement delta-neutral strategies, for example:
You hold Lido's ETH (earning 4% annualized), while shorting ETH perpetual on Binance (hedging price risk), then short YU-ETH on Boros to lock in funding rate income.
This combination operation can generate a robust high-yield note: staking interest + funding rate arbitrage, not dependent on ETH price, only benefiting from structural interest differentials.
For yield-oriented stablecoin issuers like Ethena, this is purely beneficial; there are too many things that can be done with Boros.
Here are a few more points to note when using Boros—
① You can open a position with a margin of 1-2%, it is recommended not to use leverage at the beginning, wait until you are familiar with the net balance mechanism before expanding.
② If the margin ratio falls below the maintenance margin, it will trigger liquidation.
③ It is best to close positions or roll over a few days before expiry to avoid the expansion of funding-intensive slippage / falling into liquidity traps.
④ Always remember to pay attention to the Implied APR; this number is actually the price expectation of YU.
⑤ In addition to direct trading, users can deposit funds into the Boros treasury to provide liquidity to the market, earning transaction fee shares, PENDLE token rewards, and treasury value increase, with current LP rates reaching up to 460%. However, the treasury position risk characteristics are similar to going long YU; if the implied APR decreases, there may be significant impermanent loss, recommended only for DeFi veterans to study and try!
4️⃣ Conclusion—
In the past, we traded coins to make money from volatility;
Now we trade interest rates to hedge structural risks and earn more stable money.
Pendle has originally split the rights to yields into PT / YT, opening the prologue to the on-chain interest rate market.
Now, Boros further structures the funding rate, turning it into an independent asset that can be priced, traded, and derived.
The future imagination space behind this is—
📍 Possible support for more exchanges' funding rates: OKX, Bybit, Hyperliquid
📍 Covering more cross-chain assets: SOL, ARB, OP, and other long-tail coins
📍 Introduce real-world RWA interest rate products, becoming the interest rate bridge between TradFi and DeFi.
By then, stablecoins, yield notes, hedge funds, and even traditional institutions' interest rate strategies may directly use Boros's YU as an anchor point. Think about it; isn't it quite interesting!
Finally, I would like to offer a practical suggestion that applies to everyone who has just come into contact with and wants to understand Pendle Boros—
If you are still hesitant to open a position directly, you might want to try shadow hedging first:
Open a very small perpetual long position on a CEX, like 0.001 BTC, then go long YU-BTC 1:1 on Boros (or both go short simultaneously), observe the changes in funding flows on both sides, and familiarize yourself with the UI and settlement mechanism.
This way, even if you lose, you lose very little, but you can quickly get familiar with the logic of the entire funding rate trading.