Preface
Pendle Finance launched the revolutionary sub-platform Boros in August 2025, designed for trading funding rates by converting funding rates into Yield Units certificates for investors to engage in trading, hedging risks, arbitrage, and other operations.
Not only that, but Boros has also injected new life into Pendle Finance, attracting the attention of most global investors while opening up revenue channels. Within a few days of Boros's launch, Pendle's TVL surged to a record 8.5 billion USD, and the platform token $PENDLE rose by 50% in a week, which is quite impressive compared to other DeFi tokens during the same period.
What is the Boros parent platform Pendle?
Pendle Finance is a DeFi platform focused on tokenizing principal and yield separately, allowing users to manage their assets more flexibly according to their needs. The Principal Token (PT) represents the principal amount, which users can often purchase at a discount; the Yield Token (YT) represents the yield portion, and holders can receive emissions rewards and airdrop points for that token.
For example, if a user wants to participate in the recent strong-performing Ethena airdrop event, they can purchase YT-USDe tokens through Pendle Finance to get 60x points airdrop, or if they simply want to earn from the token price difference, they can convert USDe to PT-USDe at a rate of 1:1.017.
Readers interested in Pendle Finance can refer to: (Pendle Finance: Analysis of PT, YT, and liquidity pool airdrop points!)
Introduction to the Boros Platform
Boros is a trading sub-platform under the Pendle protocol. Unlike Pendle Finance, which tokenizes principal and yield separately, Boros focuses on converting the funding rates of perpetual contracts in cryptocurrency exchanges into tradable assets. This innovation not only expands Pendle's tokenized ecosystem but also provides investors with a variety of operational choices.
Boros operates on the Arbitrum blockchain, which also helps to reduce the gas fees that investors need to pay when using the platform. Under normal blockchain operations, the Boros platform estimates that approximately every 50 transactions only require an equivalent of 1 USD in ETH as fuel costs.
Must-know terms for Boros
Before using Boros, I believe it is essential to first understand the three terms: YU, Implied APR, and Underlying APR.
Yield Units (YU)
The core asset of Boros, each YU represents a unit of funding rate rights in the exchange. For example, purchasing a YU for BTCUSDT on the Boros platform represents the ability to collect 1 BTC funding rate in the Binance exchange every eight hours.
YU is similar to Pendle Finance's YT token, allowing users to receive benefits until the expiration date. Therefore, the price of YU will gradually decrease with each funding rate settlement, and when the expiration date arrives, it indicates that YU will no longer be able to participate in any funding rate settlements, and its value will drop to zero.
Implied APR
The price of YU expressed as a percentage can also be viewed as the consensus price for funding rates in the market. If a large number of traders in the market believe that the Bitcoin market will experience bullish sentiment and therefore buy YU in large quantities, the Implied APR will rise due to the buying pressure, and vice versa.
Underlying APR
The real data generated from actual funding rate emissions represents the returns that holding YU can earn. It is based on the source of YU purchased by traders. Assuming the aforementioned investor purchases YU-BTC from Binance, Boros will pay the fees to YU holders according to Binance's actual funding rate emissions.
In non-extreme markets, most cryptocurrencies typically maintain a funding rate of about 0.01% every eight hours, so the Underlying APR will remain at 0.01% * 3 * 365 = 10.95%, which is also the most common annualized funding rate emission.
Boros Interest Rate Settlement Rules
Boros will synchronize the funding rate settlement time of the target market. Taking YU for BTCUSDT Binance as an example, Binance settles the funding rate for BTC trading pairs every eight hours, so Boros will also synchronize to settle every eight hours. If Boros introduces the Hyperliquid contract market in the future, it will settle every hour in accordance with Hyperliquid.
How to earn returns from long and short positions?
After understanding the basics of the Boros platform, one must also understand the logic behind going long or short on YU. The following will detail the underlying logic of going long and short on YU.
Long YU: Pay Implied APR, receive Underlying APR, bullish on funding rates
When you expect the funding rate to rise, you can earn returns by going long on YU. Going long on YU requires paying Implied APR and receiving Underlying APR as returns, so as long as Underlying APR > Implied APR, it is profitable.
For example, suppose the current consensus price (Implied APR) for BTCUSDT on the Boros market is 8%, and Binance's funding rate is 0.01% (Underlying APR = 10.95%). In this case, as long as you go long on YU and continuously receive the funding rate, you can earn a positive return.
Image source: Boros GitBook
Short YU: Pay Underlying APR, receive Implied APR, bearish on funding rates
Conversely, when expecting the funding rate to decline, one can earn returns by shorting YU. Shorting YU requires paying Underlying APR and receiving Implied APR as a return, so the principle for earning from shorting is Implied APR > Underlying APR.
Similarly, looking at the example of Implied APR at 8% and Underlying APR at 10.95%, investors shorting YU will have to pay 10.95% in APR fees but only receive 8% in fee returns, thus resulting in a loss for the shorting investors in this scenario.
Image source: Boros GitBook
What fees will Boros charge?
Boros will charge three types of fees and retain a portion of the funds as vault incentives. The fees charged by the platform are as follows:
Swap Fee: Boros will charge a fixed Swap Fee based on the Implied APR for each transaction.
Open Interest Fee: When settling funding rates, Boros will charge a 0.2% fee on the YU token for open positions, so the recipient will need to deduct 0.2% from the received fees, while the payer will need to add 0.2%.
Operation Fee: Boros will charge an operation fee once for the first transaction and approximately every 50 transactions thereafter, which is about 1 USD under normal gas fee conditions.
Introduction to the Boros Vault
The Boros vault essentially serves as what we call a 'liquidity pool'. Its main purpose is to act as a counterparty for investors trading YU. Unlike Pendle Finance LP, Boros deposits long YU and collateral when participating in the liquidity pool. Therefore, if Implied APR continues to decline, it may lead to additional losses.
Users providing funds to the vault will enjoy the following benefits:
$PENDLE incentive measures: Boros will distribute $PENDLE tokens as rewards for users providing liquidity.
Swap Fee: If a large number of users use Boros and pay the Swap Fee, users participating in the vault will benefit as a result.
Implied APR increase bonus: Users participating in the vault signify holding long YU, so if Implied APR rises, the account funds that users withdraw will also increase.
Currently, the annualized rewards for BTC and ETH tokens in the vault are about 180%. Users can decide whether to participate in depositing based on their own judgment.
What are the ways to play Boros?
After understanding the mechanisms of Boros and the potential losses and fees that may arise, it is worthwhile to reflect on when one might need to use Boros to trade funding rates. I will provide three ways to play that can be utilized according to needs.
Direct trading to earn returns
The simplest and most direct method is to trade YU directly and earn from the fee spread. However, this method is more influenced by individual judgment, and a misjudgment may lead to severe losses.
However, the biggest benefit of directly trading YU is the maximization of returns. Once the direction of the funding rate is correctly judged, one can purchase the equivalent of 100 BTC funding rate rights for the price of 1 BTC, and if YU experiences a significant rise or fall, it could generate multiple returns.
Hedging funding rate risks
In extreme sentiment markets (such as bull markets), funding rates are usually very high, causing investors utilizing perpetual contracts for long trades to pay significant funding rates. At this point, one can hedge using YU and receive Underlying APR as a offset. However, it is essential to note that in extreme markets, Implied APR will also rise, so be sure to pay attention to market conditions before hedging.
Arbitrage Opportunities
There can easily be discrepancies in funding rates between platforms. In the past, we had to open long and short positions simultaneously in two different exchanges to engage in arbitrage, incurring high handling fees in the process. However, the emergence of Boros allows us to directly leverage the characteristics of YU for arbitrage.
Conclusion
Boros has launched the first funding rate trading platform in the market, combining Implied APR and Underlying APR into the YU token. This not only provides investors with more operational choices but also expands the on-chain territory of Pendle Finance.
However, the value of Boros has not yet been fully realized. In the future, it may integrate more exchanges and currency pairs, potentially covering various tokenized TradFi assets. Therefore, whether you are a trading expert or an arbitrage specialist, Boros is likely to provide profitable opportunities effectively.
This report is for informational sharing only and does not constitute any form of investment advice or decision-making basis. The data, analysis, and views cited in this document are based on the author's research and public sources and may involve uncertainties or changes at any time. Readers should make investment judgments prudently based on their own situations and risk tolerance. For further guidance, it is recommended to seek professional advisory opinions.
