Sense Finance

Sense Finance is a yield-stripping protocol that decomposes yield-bearing assets into zero-coupon Principal Tokens and Yield Tokens for fixed-rate and yield-trading use cases. Verify on-chain activity before relying on it.

Early yield-tokenization design (Sense Space AMM); confirm current activity levels before treating its markets as live.

- Sense Divider (yield stripping): Core Sense v1 contract that takes any yield-bearing asset (a 'Target', e.g. stETH or cUSDC) via an adapter and splits it into two fixed-term ERC-20 tokens for a given maturity: a Principal Token (PT, 'sP' prefix) that redeems 1-for-1 for the underlying at maturity, and a Yield Token (YT, 'sY' prefix) that claims the yield accrued until maturity. Combining PT+YT reconstitutes the Target. - Sense Space AMM: A custom fixed-rate automated market maker (a YieldSpace implementation) where PTs and YTs trade. Its key innovation is that LPs deposit the yield-bearing Target itself as the quote asset rather than the underlying; accrued Target yield is excluded from the YieldSpace invariant and reserved for LPs, so LP capital keeps earning even when no trading occurs. Space is deployed on Balancer V2 vault infrastructure and includes a TWAP oracle. - Adapters: Permissionless connector contracts that onboard a specific yield-bearing asset into Sense (e.g. Lido stETH, Compound cUSDC). Adapters define how a Target's scale/underlying is read, enabling anyone to add new fixed-income markets without core-team approval. - Roller / Auto-Roller (RLV): A Roller Liquidity Vault that automatically rolls liquidity from an expiring PT/YT series into the next maturity, letting LPs maintain continuous fixed-income exposure without manually migrating at each rollover. Audited separately by Sherlock and Fixed Point Solutions in late 2022.

- SENSE (SENSE) — Token, Governance token

- Systemic: The protocol is deprecated: the Sense Core team ceased all contributions in October 2023 and stopped hosting the front-end on December 1, 2023. Remaining PTs/YTs and Space LP positions rely on immutable, unmaintained contracts with no team support, no active UI, and effectively no liquidity — any residual value must be interacted with directly on-chain. - Smart Contract: Sense is a complex yield-stripping system (Divider, adapters, Space AMM built on Balancer V2, and the Auto-Roller vault). Despite multiple audits, unmaintained immutable contracts cannot be patched, so any latent bug in the Divider, adapters, or Space math is permanent and unmitigable now that the team has stepped away. - Collateral: Each fixed-income market depended on the specific yield-bearing Target it wrapped (e.g. Lido stETH, Compound cUSDC). Adapters were permissionless, so a poorly-chosen or compromised Target could impair the PT/YT of that series; PT redemption value is only as sound as the underlying Target and its adapter's scale accounting. - Oracle: Space integrated a TWAP oracle and adapters read a Target's 'scale' to value redemptions and yield accrual. Manipulation or mispricing of the Target scale or the Space TWAP could distort PT/YT valuations and enable mispriced trades or unfair redemptions. - Reserve / Depeg: Because Targets were assets like stETH, a depeg of the underlying yield-bearing asset (e.g. stETH trading below ETH) would directly reduce the redemption value of the corresponding Principal Tokens, transmitting the underlying's peg risk to Sense fixed-income holders.

- Zero-coupon bond / STRIPS (Treasury interest-rate strips): similar — A Sense Principal Token is economically a zero-coupon bond on the underlying asset: it is bought at a discount and pays out a fixed amount (the principal) at a set maturity date, locking in a fixed yield. This mirrors how TradFi STRIPS separate a coupon bond's principal from its interest payments and trade the principal as a discount instrument.; differs — PTs are permissionless, on-chain, and reference DeFi yield-bearing assets (stETH, cUSDC) rather than sovereign/corporate credit; they carry smart-contract and Target/depeg risk rather than issuer credit risk, and have no coupon at all (the yield stream is separated into the Yield Token). - Interest-rate strip / coupon strip: similar — A Sense Yield Token is analogous to the coupon strip of a bond: it isolates and trades only the future interest (yield) payments of the underlying over a fixed term, letting holders take a directional view on rates.; differs — YTs settle continuously against the actual on-chain yield of the Target and become worthless at maturity, versus fixed, contractually scheduled coupons on a TradFi bond; pricing is set by an AMM, not a dealer market.