Credit · Fixed Income · SENSE
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.
Yield stripping into zero-coupon and yield tokens.
Protocol TVL
$22.1K
Latest data · 15 min delay
Sense was a yield stripping protocol on Ethereum that split a yield bearing Target asset into Principal Tokens and Yield Tokens for a defined Series with a Maturity, where plus always equals the underlying and PT redeems 1:1 at maturity while YT becomes worthless after it (Sense docs, core concepts). Sense described the mapping in explicitly bond terms: "PTs are like zero-coupon bonds, delivering a single cash flow at maturity" and "YTs are like floating rate bonds" (Sense, Designing Yield Tokens). It traded through Sense Space, a custom fixed-rate AMM adapting the YieldSpace invariant so that both pool assets could be yield bearing, and used Rolling Liquidity Vaults to automate maturity rolls (Sense, Introducing Sense Space, Sense docs, RLV, Why Sense). This protocol is sunset. On 26 October 2023 the team wrote that "After 18 months of operation, we've made the decision to sunset the Sense Protocol and open-source the UI", telling users to withdraw by 1 December 2023 (Sunsetting Sense).
Early yield-tokenization design (Sense Space AMM); confirm current activity levels before treating its markets as live.
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.
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.
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.
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.
Series were live from 2022; the earliest documented series include sP-wstETH:01-05-2022:5 and sP-cUSDC:01-07-2022:6. The sunset post dates operation as "18 months" ending October 2023
sense-v1 READMESense v1 with Space v1 AMM, sunset. Core team ceased contributions in October 2023 and the UI was open sourced
Sunsetting SenseSense Finance, Inc.
Sense Terms of Service, last modified 19 Jan 2022`n.a.` (not stated in the Terms of Service)
Sense Terms of ServiceNone. No governance token is documented in any fetched source: `n.a.`
Sense docs, FAQ`n.a.` No forum, Snapshot or Tally venue is stated in the docs or Terms of Service
Sense Terms of ServiceEthereum Mainnet only
Sense docs, security$42,168 residual as of 26 Jul 2026, all on Ethereum, with 1 pool tracked at an 8.84 percent average APY
DefiLlama SenseEight reviews: Peckshield (Sense v1, 2021-11), ABDK (Sense v1, 2021-11 and 2022-03), Fixed Point Solutions / Kurt Barry (Sense v1 2021-11 to 12, Space v1 2022-02 to 03, RLV 2022-09 to 10), Spearbit (Sense v1 and Space v1, 2022-01), Sherlock (RLV, 2022-11)
Sense docs, securityA "public bug bounty program" is described but no maximum payout is stated: `n.a.`
Sense docs, securityhttps://docs.sense.finance
Sense docs, core conceptshttps://github.com/sense-finance, 14 repositories, tagline "Adding dimension to DeFi", contact@sense.finance
GitHub Sense FinanceDivider 0x86bA3E96Be68563E41c2f5769F1AF9fAf758e6E0, SpaceFactory 0x9e629751b3FE0b030C219e567156adCB70ad5541
sense-v1 READMEClosest analogue
Sense named it itself, the zero-coupon bond paired with a floating rate note.
Instrument shape
Sense Finance
"PTs are like zero-coupon bonds, delivering a single cash flow at maturity"; "YTs are like floating rate bonds"
TradFi analogue
Zero-coupon bond and FRN, the two halves of a stripped coupon bond
Underwriting
Sense Finance
None. Series were created per Target asset with adapters, and plus always equalled the underlying
TradFi analogue
Strip issuance against an existing security, not a credit decision
Collateral
Sense Finance
Debtless. Sense was explicitly a "debtless stripping protocol", so no borrowing position backed the split
TradFi analogue
STRIPS separation, which creates no leverage, unlike a repo-financed strip
Rate setting
Sense Finance
Implied fixed rate derived from the discount, traded on Sense Space, a YieldSpace-invariant AMM adapted so both pool assets can be yield bearing
TradFi analogue
Yield curve implied from strip prices on a dealer platform
Settlement
Sense Finance
redeems 1:1 at maturity; settlement runs through Divider.settle with a grace period and an MEV-style settlement reward, and Rolling Liquidity Vaults automate the roll into the next series
TradFi analogue
Bond redemption at par with an agent-run settlement process and automatic reinvestment
Recourse on default
Sense Finance
None. Risk sits in the Target asset and the adapter; deprecated adapters were flagged in the docs
TradFi analogue
Collateral risk only, no issuer to pursue
Regulation
Sense Finance
Operated by Sense Finance, Inc. under a Terms of Service last modified 19 January 2022, with no securities registration disclosed
TradFi analogue
An unregistered platform, unlike a broker-dealer running a strips desk
Note: no other named officers or a Jonathan Wu role could be confirmed from a fetched source, so those are `n.a.`
Seed
3 Aug 2021$5.2m
Total raised: $5.2m across one round (DefiLlama Sense, ICO Drops). ICO Drops additionally lists Variant, The Lao and Nascent among the investors (ICO Drops).
Key milestones: launches, upgrades, exploits and governance events.
$5.2m seed led by Dragonfly Capital with Bain Capital Crypto and Robot Ventures; Kenton Prescott named as co-founder and CEO
StatedOnly funding round; the thesis was that existing yield trading solutions were "prone to protocol insolvency and capital lock-ups"
SourceFirst audits: Peckshield and ABDK on Sense v1, plus Fixed Point Solutions from 2021-11 to 12
StatedPre-launch security work
SourceSpearbit reviews Sense v1 and Space v1
StatedCore plus AMM reviewed together before launch
SourceTerms of Service last modified, naming Sense Finance, Inc.
StatedLegal wrapper established at launch
SourceEarly series mature, including sP-wstETH:01-05-2022:5 and sP-cUSDC:01-07-2022:6
StatedEvidence of live, settled fixed-term markets
SourceFixed Point Solutions audits the Rolling Liquidity Vault
StatedAutomated maturity rolls added and reviewed
SourceSunset announced: "After 18 months of operation, we've made the decision to sunset the Sense Protocol and open-source the UI", citing that "the current DeFi market landscape lacks the consistent demand for fixed rates"
StatedEnd of the protocol and the clearest statement of the category's demand problem
Source$42,168 of residual TVL remains on Ethereum
StatedConfirms the protocol is dormant, not operating
SourceNo. The protocol was sunset on 26 October 2023 after 18 months of operation, the UI was open sourced, the core team ceased contributions and users were told to withdraw by 1 December 2023 (Sunsetting Sense). DefiLlama shows $42,168 of stranded residual TVL as of 26 July 2026 (DefiLlama Sense).
Demand, not a hack. The team's stated reason was that "the current DeFi market landscape lacks the consistent demand for fixed rates" (Sunsetting Sense). No exploit or bad debt event is recorded in any fetched source.
Sense Space, its AMM. It was "an application of the Yieldspace Invariant pool model, that has been further adapted to allow both of the underlying assets to be yield-bearing", which the team called "the fundamental technical innovation behind Sense Core" (Why Sense). It was also a debtless stripping protocol supporting early redemption (Introducing Sense Space).
Each Series had a Target asset and a Maturity. and were prefixed sP and sY, PT plus YT equalled the underlying, PT redeemed 1:1 at maturity and YT became worthless after it (Sense docs, core concepts, Sense docs, FAQ).
Yes, unusually so for its size: eight reviews across Peckshield, ABDK twice, Fixed Point Solutions (Kurt Barry) three times, Spearbit and Sherlock, spanning Sense v1, Space v1 and the Rolling Liquidity Vault between November 2021 and November 2022 (Sense docs, security). The shutdown was a commercial decision, not a security failure.
No governance token or governance venue is documented in any fetched source, so both are `n.a.` The Terms of Service names Sense Finance, Inc. as the operating company (Sense Terms of Service, Sense docs, FAQ).
Yes. The UI was open sourced at the sunset, and the contracts remain published under the sense-finance GitHub organisation with 14 repositories, including the deployed Divider at 0x86bA3E96Be68563E41c2f5769F1AF9fAf758e6E0 (Sunsetting Sense, GitHub Sense Finance, sense-v1 README).
Bull case
The intellectual contribution stands: Sense articulated the cleanest TradFi mapping in the sector, that "PTs are like zero-coupon bonds, delivering a single cash flow at maturity" and "YTs are like floating rate bonds" (Designing Yield Tokens).
Designing Yield TokensSense Space was a genuine primitive, a YieldSpace invariant adapted so both pool assets could be yield bearing, which the team identified as the core innovation behind Sense Core (Why Sense).
Why SenseThe code carries eight independent audits between November 2021 and November 2022, including Spearbit and Sherlock, and was open sourced at sunset, so it is a usable reference implementation (Sense docs, security, Sunsetting Sense).
Sense docs, securityIt was backed at $5.2m by Dragonfly Capital, Bain Capital Crypto and Robot Ventures, so the design was validated by specialist capital before the market turned (CoinDesk).
CoinDeskBear case
**Sense is sunset and is not a live protocol.** The 26 October 2023 announcement ended core team contributions after 18 months of operation and set a 1 December 2023 withdrawal deadline (Sunsetting Sense).
Sunsetting SenseWhat remains is $42,168 of stranded TVL on Ethereum as of 26 July 2026, across a single tracked pool (DefiLlama Sense).
DefiLlama SenseThe stated failure mode is the category risk for every entity in this sector: "the current DeFi market landscape lacks the consistent demand for fixed rates" (Sunsetting Sense).
Sunsetting SenseThere is no token, no DAO and no treasury to restart from; total capital raised was a single $5.2m round in August 2021 (DefiLlama Sense, CoinDesk).
DefiLlama SenseExternal publications on this protocol: risk assessments, analyst reports, audits and post mortems.
The definitive shutdown record: 18 months of operation, UI open sourced, withdraw by 1 December 2023, no consistent demand for fixed rates
Eight audits across Peckshield, ABDK, Fixed Point Solutions, Spearbit and Sherlock covering Sense v1, Space v1 and RLV
Sets out the Collect versus Drag YT designs and the zero-coupon bond and FRN mapping used across the sector (older source)
Round detail plus Kenton Prescott's framing that prior yield trading designs risked protocol insolvency and capital lock-ups (older source)
Independent record of the single $5.2m Q3 2021 seed and the wider investor list including Variant, The Lao and Nascent
Formal pricing and hedging treatment of the PT and YT split that Sense pioneered
$42,168 residual TVL on Ethereum and the $5.2m total raised
