Introduction to PRYZM
PRYZM emerges as the layer-1 blockchain uniquely focused on the harvesting, trading, and use of yield. Utilizing the Cosmos SDK and Tendermint consensus, PRYZM positions itself as a cross-chain hub for managing risks associated with fluctuating prices and yields of Proof-of-Stake (PoS) and DeFi assets.
PRYZM’s Core Features
- Stripping of Yield: Built-in features at the chain level enable the separation of yield from yield-bearing PoS and DeFi assets.
- Innovative dApps: The ecosystem supports the development of dApps that utilize cash flows generated by these assets.
PRYZM V2: The Hub and Spoke Model
- PRYZM Hub and Outposts: PRYZM V2 will operate using a hub and spoke model. The PRYZM Hub will control ‘Outposts’ on various chains, allowing users to refract assets.
- Asset Refraction: PRYZM refracts liquid staking derivatives (CT) of yield-bearing assets (YBAs) such as Eth, Atom, Dot, Matic, Osmo, or Luna into two assets: a Principal Token (PT) and a Yield Token (YT).
- Function of PT and YT: YT enables users to earn all the yield from the CT during a fixed term, while PT allows redemption of the CT at term end.
Market Dynamics and AMM Model
- Pricing Mechanism: The free market will set prices for YTs and PTs on PRYZM’s capital efficient Automated Market Maker (AMM).
- Benefits: This separation allows users to earn staking rewards without long-term asset lock-up and avoid volatile interest rates for raising capital.
DeFi Market Potential Compared to TradFi
- Current Market Size: While DeFi markets for fixed income and interest rate derivatives are small, traditional finance (TradFi) markets stand at massive sizes — $130 trillion for fixed income and $500 trillion for interest rate derivatives.
- PRYZM’s Vision: PRYZM believes DeFi will evolve to mirror TradFi structures and aims to provide essential primitives for this transformation.
Conclusion
PRYZM is set to be a pivotal player in the DeFi space, offering innovative solutions for yield harvesting and asset trading. By aligning its features and operations with evolving market trends, PRYZM is poised to significantly impact both the DeFi and TradFi sectors.
