How Boros Turns Funding Rates Into Tradable Onchain Yield

This article is brought to you by Pendle.

If you've traded perpetual futures, you've paid or received funding: the periodic payment that flows between longs and shorts to keep a perp's price tethered to spot. It's a cost or a benefit that sits alongside every position, and up to now there's been no direct way to trade it, hedge it, or take a view on it separately from the position itself.

Boros, a recent product from Pendle, changes that. It takes the funding rate itself and turns it into something you can buy, sell, hedge, or lock in: a tradable asset in its own right, not just a side effect of holding a perp.

What a Funding Rate Actually Is

Perpetual futures don't expire like traditional futures contracts, so exchanges need a mechanism to keep the perp price tethered to the spot price. That mechanism is funding: when the perp trades above spot, longs pay shorts; when it trades below, shorts pay longs. The payment resets periodically (often every few hours), and the rate can swing sharply depending on market sentiment and positioning.

The problem is that funding is unpredictable and, until Boros, untradeable on its own. If you're running a perp position, you're stuck taking whatever the market's rate happens to be on any given day. And if you had an opinion on where funding was headed, there was no direct way to put it into a trade.

Boros’s Yield Unit (YU)

Boros solves this by wrapping a floating rate, starting with perp funding, into a tradable token called a Yield Unit (YU). Every YU market splits into two sides:

• Long YU: you pay a fixed rate and receive the floating rate. You want floating rates to rise above the fixed rate you locked in.

• Short YU: you pay the floating rate and receive a fixed rate. You want certainty, or you expect floating rates to fall.

Each market shows two numbers that matter: the Underlying APR (the current floating rate) and the Implied APR (the fixed rate the market has priced in). Trading YU is essentially taking a position on the gap between those two. As one example, at the time of writing an ETHUSDT market on Boros showed an Underlying APR of 1.97% against an Implied APR of 4.61%, a live illustration of how far the fixed and floating sides can diverge, though these figures move constantly and shouldn't be read as a standing opportunity.

What Can Users Do With Funding Rates on Boros?

Boros gives users three ways to act on a funding rate. 

Take a rates view: You think funding is heading up or down and want to take a direct position on it, without touching the underlying token's price.

Hedge my funding rates: You already hold a perp position and want to lock in your funding cost instead of being exposed to it swinging against you.

Capture the spread: You want to exploit a funding rate difference between two venues (say, Boros pricing versus CME or Deribit) in a delta-neutral trade.

All three are variations on the same primitive, going long or short YU, applied to different goals. None require a view on where ETH, BTC, or any other underlying asset's price is going.

Why This Matters for Pendle

Pendle's original product, Pendle V2, is built around a simple idea: split a yield-bearing asset into two parts, a principal token, which represents the underlying asset itself, and a yield token, which represents the income it generates. Once separated, each half can be traded independently. Someone who wants upside on future yield can buy the yield token; someone who wants certainty can lock in a fixed return by holding the principal token to maturity. Either way, yield that used to be locked inside a single position becomes something you can price, trade, and hedge on its own.

Boros takes that same underlying idea (separate a rate from the position that produces it, then let each side trade freely) and applies it to a much bigger, faster-moving category: floating rates tied to leverage, starting with perpetual funding. Where Pendle V2 deals with yield that accrues relatively slowly and predictably (staking rewards, lending yield, LP returns), Boros deals with a rate that can flip sign within hours and is tied directly to how leveraged traders are positioned across the market.

That distinction is why Pendle is positioning Boros as a second core product rather than a feature bolted onto V2. Together, the two products span very different points on the risk and volatility spectrum: V2 for stable, income-generating yield, Boros for the sharper, more volatile rates that come from derivatives markets. The shared thread is Pendle's broader thesis: that almost any rate, however it's generated, is more useful to markets once it can be split out and traded on its own rather than bundled into a position you have to hold in full.

Beyond Crypto: Commodities and Equities Are Already in Scope

The breadth here is worth underlining. Boros isn't limited to crypto funding rates. Its market list already includes commodity-linked rates like Brent Oil, alongside the usual BTC and ETH markets.

As of writing, that Brent Oil market carried over $540,000 in notional open interest, a modest but real sign that traders are already using Boros for rate exposure outside of crypto-native assets. The long-term thesis is that any floating rate, onchain or off, could eventually be priced and traded through the same mechanism.

Two Ways In: Trading and Passive Vaults

Boros isn't a single interface. It splits into two distinct surfaces depending on whether you want to actively trade rates or simply put collateral to work.

Markets: Active Rate Trading

This is where everything described above happens. On the Markets page, you pick a specific market (say, ETHUSDT or BTCUSDC), a maturity date, and a side (long or short YU), then set a size. Each market shows live Underlying APR and Implied APR, order book depth on both the long and short side, and a rate sensitivity figure showing how much your position moves for every 1% shift in implied rates. This is the surface built for the three jobs above: taking a rates view, hedging an existing perp, or capturing a cross-venue spread.

Vault: Passive Yield Without Picking a Side

Boros also offers a Vault, a lower-touch alternative for people who want yield exposure without actively trading. You deposit BTC or ETH as collateral into a fixed-term pool, for example, an 79-day BTCUSDC pool, and earn an LP APY generated by the trading activity happening on the Markets side, without needing to choose long or short YU yourself. It's a passive way to participate in Boros's growth if you'd rather not manage an active rates position.

Getting Started

Boros's Quick Start screen turns the three moves above into three guided flows, each with its own screen, terminology, and example, rather than dropping you straight into an order book.

Funding Rate Speculation

This is the direct rates-view flow. You pick an asset (BTC, ETH, and others), an exchange whose funding rate you're speculating on (Bybit, KuCoin, and others), and a time period, then enter your own prediction for the average funding rate over that window. Boros then searches for YU markets that match, going long if you expect the rate to land above the current Implied APR, short if you expect it to land below. As an example, entering BTC on KuCoin over a 23-day window shows a live average funding rate prediction of 11.94%, alongside toggles to compare that against the current rate or its 7-day and 30-day moving averages.

Funding Rate Hedge

This flow is built for people who already hold a perp position. You specify which perp and which exchange you're hedging, and Boros searches for a matching fixed-rate hedge. Under the hood, this connects two sides: a "perp trader" paying floating funding on their live position, matched against a "carry trader" who receives that floating rate and, in exchange, fixes their own funding yield through Boros. Your underlying perp position stays exactly where it is; only the funding exposure moves.

4-Leg Arbitrage

This is the more advanced, delta-neutral version of "capturing the spread." Boros presents a table of ready-made strategies: for each one, you'd go long YU on one exchange's market and short YU on another exchange's equivalent market, while Boros locks in fixed rates on both legs. The gap between what you pay on the long leg and receive on the short leg is your estimated fixed return. At the time of writing, live strategies on the board ranging up to over 21% estimated fixed APR, depending on the asset pair and maturity, a reminder that these spreads move constantly and shouldn't be read as a standing return.

For anyone who'd rather not actively manage any of these three flows, depositing into the Vault (covered above) is a simpler entry point: no side to pick, no maturity to time, just collateral earning LP yield from Boros's trading activity.

A Few Things Worth Remembering

Boros makes funding rates tradable, but trading them still carries real risk. A few things worth keeping in mind before using it:

Funding rates are not stable. They can swing sharply in either direction depending on market positioning, and a rate that looks attractive today can move against you before your position matures.

Nothing here is a guaranteed return. Implied APR is the market's current pricing, not a promised outcome, the same way a bond's yield-to-maturity isn't a guarantee if you sell early or the issuer's rate assumptions change.

Leverage cuts both ways, on both legs. Long and short YU positions can be opened with leverage, and each leg carries its own liquidation risk independent of what the underlying asset's price does. A position can be liquidated purely on rate movement, with no change in ETH or BTC's spot price at all.

The figures in this piece are a snapshot, not a forecast. Underlying APR, Implied APR, and open interest figures cited above reflect Boros data at the time of writing and will have moved by the time you're reading this. Treat them as an illustration of how the mechanics work, not as current market conditions.

This article is an explanation of a new mechanism for a market, and is not financial advice, and not a recommendation to take a position.

Figures cited (Implied APR, Underlying APR, notional open interest) reflect Boros data at the time of writing and are illustrative only, not current market conditions or guarantees.