Flux Finance invests in U.S. government debt-backed yield farming.
Flux Finance is not the first to roll out DeFi bond-investment services.
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Flux Finance has launched a decentralized lending protocol that allows users to deposit USDC or DAI into Flux’s protocol, which is backed by U.S. Treasury-backed Government Bond Fund (OUSG). In turn, users receive derivative tokens fUSDC or fDAI.
This service, wherein users get rewarded with tokens for providing liquidity to the project, is called “yield farming”. Therefore, fUSDC and fDAI tokens can be used as collateral in lending and derivatives protocols, similarly to liquid staking protocols.
Flux is a fork of autonomous interest rate protocol Compound, a software running on Ethereum that incentivizes a distributed network of computers to operate a traditional money market.
DeFi protocols use smart contracts instead of third parties, or intermediaries, to provide financial services to users.
Recently, another DeFi protocol — Ondo Finance — launched tokenized corporate bonds with yields on stablecoins. Ondo provided three products for on-chain investing in exchange-traded bonds and U.S. Treasurys.
Interest in generating income from tokenized U.S. government debt increased as interest rates on major DeFi platforms fell, and monetary policy of the Fed tightened.
