Table of contents

1. Unlocking fixed income, stability and predictability
2. Key points
3. Background
4. Pryzm: Layer-1 for Revenue Tokenization
4.1. Future Profits from Today's Transactions
5. Technical foundation
5.1. Application chains born for profit
6. Revenue Tokenization and Trading
7. Value Proposition
8. Industry Outlook
9. Market opportunities and challenges
9.1 Favorable conditions for wider adoption
10. $PRYZM’s strategic growth and its impact
11. Conclusion
12. References
13. Show

Unlocking fixed income, stability and predictability

Pryzm is a Layer-1 application chain (appchain) designed to transform yield management. By allowing the tokenization of yields and making them tradable on automated market makers (AMMs), Pryzm aims to lay the foundation for a multi-trillion market opportunity similar to fixed income and interest rate derivatives in traditional finance.

Pryzm's unique selling point stems from its ability to provide fixed income, stability, and predictability in the current DeFi market. By providing a permissionless and interoperable trading yield market, Pryzm solves key pain points observed in DeFi, such as yield volatility, asset lock-up, and governance issues.

Key Takeaways

  • Initially, the Pryzm team envisioned deploying a set of smart contracts on an existing blockchain, but they realized that to truly replicate the breadth and complexity of the traditional financial (TradFi) market, it was essential to build an application chain. This approach will ensure basic features such as customization, interoperability, scalability, sovereignty, and performance - these are not possible when running on a third-party Layer-1 blockchain.

  • Pryzm is a Layer-1 application-specific chain that is immediately interoperable with the Cosmos ecosystem (via IBC) and beyond (via universal messaging protocols like Axelar and Wormhole), focused on transforming yield management by tokenizing yield and making it tradable on automated market makers (AMMs).

  • Pryzm solves DeFi pain points such as yield volatility, asset lock-up, and governance issues by providing a permissionless and interoperable market to trade yields, aiming to rival the trillion-dollar interest rate derivatives (IRDs) market in traditional finance (TradFi).

  • Pryzm allows for the immediate tokenization and trading of future returns, creating a new asset class by splitting yield-bearing assets into principal tokens (pTokens) and yield tokens (yTokens), similar to zero-coupon bonds and coupon payments in traditional finance.

  • In a saturated market for sectors like lending and stablecoins, Pryzm’s yield tokenization and trading stands out, providing a clear value proposition, extending the utility of tokens, and promoting collaboration and positive-sum games.

  • Pryzm forgoes venture capital (VC) funding, opting for a decentralized, community-driven growth model that avoids centralization of token supply.

  • The chain generates revenue through revenue share, exchange fees, MEV capture, and token restaking rates, reflecting a diverse and innovative approach compared to traditional Layer-1 blockchains - all of which is accumulated by the $PRYZM token.

  • The Pryzm Treasury, managed by $PRYZM token holders, collects various tokens and grants strategies such as value preservation, buyback and destruction, loyalty rewards, and community pool contributions, and is governed through a democratic process.

background

Deeply rooted in the founding team's experience in interest rate and yield markets in traditional finance (TradFi), they set out to build the first and only specific application chain (appchain) dedicated to tokenizing and trading yields. This will immediately open the door to the broader Cosmos ecosystem, find synergies with other application chains, and unlock more utility for their staked assets.

Pryzm has chosen a community-centric funding model that prioritizes decentralization and broad token distribution. This strategic choice reflects a commitment to ensuring broad ownership and participation within the ecosystem, avoiding early-stage private funding to avoid concentrated token ownership.

Pryzm: A Layer-1 for Tokenized Yields

Pryzm is a Layer-1 application chain dedicated to tokenizing yield and making it tradable on a dedicated AMM, changing the way yield is generated, managed, and traded in DeFi. These features uniquely position Pryzm as the only dedicated chain that provides tools for users to fully customize their exposure to yield, price, and governance power.

The platform's broad utility spans multiple market verticals, from creating future yield revenue as tradable tokens, to providing fixed income opportunities, and facilitating the trading of governance power. Pryzm's AMM is designed for efficient yield trading, including features such as limit orders, dollar cost averaging, time-weighted average price execution, and is further enhanced by re-staking capabilities, which enhances the potential and utility of yield-generating assets, allowing users to generate additional returns through exchange fees, chain revenue, and $PRYZM rewards.

Pryzm's permissionless and interoperable framework facilitates trading of any yield-generating asset (LP tokens, lending positions, LSTs, LRTs...) on any chain, addressing a critical gap in the DeFi market. It transforms Pryzm into a central yield hub, equipped to meet the needs of different investors. This comprehensive solution not only improves liquidity and yield generation, but also enhances governance participation and enables new risk management strategies for investors, providing them with tools to adapt to all yield-related needs and preferences.

Trade today for future gains

Pryzm makes it possible to tokenize and trade future earnings immediately, providing users with the ability to unlock and trade their future earnings today. This mechanism is critical to realizing the time value of money in DeFi, where the value of future assets can be significantly affected by market dynamics, liquidity conditions, earnings, interest rates, token inflation, and token unlocking.

The core function of Pryzm is the tokenization of yield: the process of depositing yield-generating assets into the platform. When a user deposits such an asset, Pryzm mints a collateral token (cToken), which is then split into two distinct components with expiration dates: the principal token (pToken) and the yield token (yToken).

pTokens: represent the principal amount of the deposited asset and maintain a 1:1 redemption value with the underlying asset at maturity. Essentially, pTokens guarantee the return of the initial invested principal after a predetermined period.

yToken: represents the future income that the deposited assets are expected to generate before the expiration date. Owners of yTokens are entitled to receive income without waiting for the natural accumulation period.

Source: Pryzm Medium

By splitting principal and earnings into pTokens and yTokens respectively, Pryzm effectively allows users to manage, trade, or leverage these components separately depending on their investment strategy, liquidity needs, or market outlook.

Source: Pryzm Medium

pTokens are similar to zero-coupon bonds in traditional finance in that they do not pay periodic interest and are issued at a discount to par value. Since they can be redeemed for full par value at maturity, this makes them an attractive option for investors seeking predictable returns.

yTokens can be compared to coupon payments on a bond. In a traditional bond, coupon payments provide the holder with a regular interest return until the bond matures. Similarly, yTokens grant holders the right to claim real-time returns generated by the underlying assets until the yToken matures.

Those who prefer a guaranteed return at a future date may gravitate toward pTokens, mirroring the risk appetite of zero-coupon bond investors. Conversely, users seeking regular income from their investments, similar to traditional bond coupon collectors, may find yTokens more appealing due to their yield-generating nature.

For example, if you stake 100 $ATOM in a DeFi protocol and expect to earn 14% in 6 months, traditionally you would have to wait until the end of the entire term to realize the 7 $ATOM gain. With Pryzm, you can instantly tokenize this future gain into yATOM while your principal is represented by pATOM. This split enables you to trade, leverage, or use your future gains (yATOM) now.

cToken = pToken (principal) + yToken (return)

pTokens and yTokens together form cTokens, such that 1 pToken can be exchanged for the underlying asset at 1:1 at maturity. At the same time, yTokens entitle the holder to receive the income of the original yield-generating asset until maturity. Therefore, yTokens are worthless at maturity.

Source: Revelo Intel

This design provides some heuristics that can be used to build a yield trading framework:

  • Maturity Assessment: Assets with longer maturities may offer greater income opportunities, but also greater uncertainty about future income and value. Conversely, assets with shorter maturities offer a more predictable income pattern, but may limit potential returns.

  • Stability through fixed income: For investors who prioritize stability, selling yTokens while retaining pTokens can lock in a fixed income, providing a guaranteed return on investment.

  • Maximizing Gain Potential: Investors who are optimistic about the performance of an asset may consider acquiring more yTokens. This strategy exploits optimistic market forecasts and aims to take advantage of higher-than-expected gains.

  • Mitigating the risk of asset value fluctuations: To offset the risk of asset value fluctuations, selling pTokens while holding yTokens can isolate the yield advantage and separate the generation of yield from the depreciation of the underlying asset value.

  • Discounted Asset Access: Purchasing pTokens can be equated to acquiring future ownership of an asset at a discounted price, especially when the market appears to be underestimating the potential of an asset or overestimating its earnings prospects.

  • Market Sentiment and Earnings Impact: It is crucial to understand market trends and sentiment, as these factors can significantly affect the valuation of pToken and yToken. A smart strategy can allow for timely entry and exit decisions, optimizing investments based on current and expected market conditions.

  • Diversification for risk management: Relying on a single strategy in the dynamic DeFi yield market may expose investors to unnecessary risk. By diversifying investment approaches across different assets and expiration timeframes, potential returns can be balanced with risks, ensuring a more resilient portfolio.

To understand the importance of this, it is important to emphasize that in DeFi, yield dominates every opportunity from liquidity provision and lending to staking and re-staking. However, this yield is volatile, making it difficult to predict future returns and cash flows. For example, borrowing rates depend on money market utilization, LP yields depend on exchange volume, and staking yields depend on network parameters, fees, and inflation rewards.

Pryzm is an application chain that provides tools to take advantage of this volatility and unlock new fixed income opportunities. By prioritizing the development of application chains with unique features at the blockchain level, it can provide a more scalable trading yield market and become the center of all LST and yield-bearing assets.

technical foundation

Pryzm has built a highly flexible, cost-effective, and interoperable platform using the Cosmos SDK and Inter-Blockchain Communication (IBC). This foundation supports a variety of yield-generating assets including tokenized lending positions, Liquidity Staking Tokens (LSTs), Liquidity Restaking Tokens (LRTs), and tokenized Real World Assets (RWAs). By leveraging Cosmos infrastructure such as IBC, Interchain Accounts (ICA), and Optimistic Execution, Pryzm provides a seamless experience for yield optimization, achieving block times as low as 0.4 seconds. This value proposition is strengthened by the introduction of custom yield trading modules such as FlowTrade (facilitating token swaps within a specified time), ICStaking (for liquidity staking Cosmos native tokens), Refractor (for yield stripping), and Yield AMM (for trading yield).

Application chain for profit

Pryzm's evolution into an application chain is a strategic response to the limitations of smart contracts and the unique advantages of application chains. Transforming from a DeFi application designed to be deployed on the underlying L1, Pryzm developed an application chain from scratch, seeking autonomy, customization, and freedom from the constraints of shared computing resources and overall blockchain parameters, which often lead to higher gas fees and limit optimization.

Application chains provide dedicated environments for specific applications, allowing Pryzm to implement modules designed for yield tokenization, liquidity governance, oracle support, and dedicated yield trading AMMs. This design ensures optimal performance, interoperability, and scalability, aligning with Cosmos' vision of the "Internet of Blockchains" and promoting a collaborative ecosystem.

By building its own Layer-1, Pryzm leverages the interoperability of the universe and its position as a favorable environment for yield opportunities. By developing specialized modules, Pryzm can expand its tokenization capabilities to a wide range of assets, broaden the scope of income generation opportunities, and enhance liquidity and capital efficiency in DeFi.

It’s also worth highlighting that Pryzm is not limited to chains connected to IBC, it can support any yield-bearing asset on any chain. Integration with Generalized Messaging (GMP) protocols like Axelar and Wormhole will allow assets like wstETH or jitoSOL to trade yields. This highlights the benefits of building Pryzm as an application chain. In addition to the sovereign advantage, Pryzm can seamlessly accept deposits of any yield-bearing asset and check the accumulated yield through its built-in oracle. This is in contrast to other projects using smart contracts, which require external oracles and cross-chain bridges to operate. Another side effect is the MEV generated due to the lightning minting and exchange functions of yield transactions. Since it is built as an application chain, Pryzm can capture MEV revenue, network fees, exchange fees, and LST earnings. If it were a set of smart contracts, then MEV would be captured by MEV seekers and network fees would be accumulated to the actual L1, which are all outside the core protocol.

Examples of supported assets include:

Proof-of-Stake (PoS) assets from IBC-connected zones such as $ATOM, $TIA, $INJ, $DYDX, $OSMO, etc. These assets have high market capitalization and staking yields, making them ideal candidates for yield tokenization and trading.

Liquidity staking and re-staking tokens provided by external providers such as Lido. These derivatives allow users to stake their assets while maintaining liquidity, creating opportunities for yield tokenization and trading.

Liquidity provider tokens (LP tokens) that represent shares of a liquidity pool on decentralized exchanges like Uniswap, Osmosis, Balancer, etc. These tokens generate fees from trading activity and liquidity incentives, allowing users to monetize, trade, or hedge their positions (e.g., hedge against impermanent losses).

Tokenized real-world assets with income streams, such as government bonds, corporate bonds, dividend-paying stocks, and ETFs. Pryzm can tokenize ownership or fractional shares of these assets, allowing users to access income-generating opportunities in traditional financial markets in a decentralized environment.

For example, let's say you have been staking $ATOM on Cosmos, aiming to earn passive income from inflation rewards and network activity fees. However, you noticed significant fluctuations in your staking annualized return (APR), dropping from 23% to 14%. This volatility in returns exposes you to uncertain income fluctuations, with no way to hedge or take advantage of these changes.

Pryzm changes this paradigm by providing a dedicated yield trading platform to help token holders and stakers mitigate this volatility and gain more stable income opportunities. By leveraging Pryzm’s tools, you can lock in your gains while yields are high, thereby stabilizing your income stream in the long term.

Revenue Tokenization and Trading

Yield essentially represents the return on investment (ROI) over time and is influenced by a variety of factors, including investment type, duration, risk, market conditions, and expectations. However, decentralized finance (DeFi) has encountered challenges in terms of yield, in particular:

Return volatility: Rapid and unpredictable changes in returns expose users to market risk and uncertainty, which may result in missed opportunities or losses.

Yield lock-up: Earning yields often requires locking assets for a specified period of time, limiting the user’s access to their capital and yields. This lock-up can cause liquidity or cash flow issues for users.

Yield governance: Yields are often intertwined with governance rights, giving users a voice in the decision-making process of the staking platform. However, some users may be reluctant to participate in governance, or may seek to delegate or monetize their voting rights.

The core advantage of Pryzm is the ability to tokenize the future returns of any yield-bearing asset. For example, any Liquidity Staking Token (LST) can be split into its yield and principal components. This cannot be ignored, as allowing users to separate and exchange the future returns of any yield-bearing token can create a new asset class.

More importantly, Pryzm helps solve the problem of liquidity fragmentation by having each yield pool hold a cToken and all the expiration dates of its corresponding pToken. This allows liquidity providers to enjoy a passive experience as the yield AMM automatically removes expired expiration dates and adds new expiration dates.

Source: Pryzm Medium

Users holding yield-bearing assets can separate and tokenize their future yields. These tokenized future yields can then be traded, hedged, or leveraged on Pryzm’s Yield AMM, creating a robust market for future yields and providing users with greater flexibility and control over their assets. Meanwhile, liquidity providers continue to earn yield on 100% of the assets in the pool, as both cTokens and pTokens have implicit yields.

Passive LP experience: The AMM module automatically renews pTokens in their respective pools, without requiring LPs to select a specific expiration date to provide liquidity. This perpetual nature, coupled with the automatic compounding feature, not only enhances yield generation, but also provides tax efficiency in many jurisdictions (by potentially characterizing these activities as capital gains rather than income).

Unified liquidity: Pryzm is designed with only one pool per asset, meaning liquidity is consolidated rather than spread across multiple maturities. This brings greater capital efficiency to LPs and ensures that liquidity is not diluted.

Minimizing Impermanent Loss: In Pryzm’s framework, the risk of impermanent loss is also mitigated due to the high correlation between cTokens and pTokens. This correlation means that the relative value of these assets is likely to move in tandem, reducing the risk of significant value differences between them.

By solving common problems such as yield volatility, lock-up periods, and governance complexity, Pryzm empowers users with the ability to earn fixed returns over a predetermined period. This introduces a fixed-income market similar to interest rate derivatives (IRDs) in traditional financial markets, enabling participants to navigate between fixed and variable returns based on their risk appetite and market forecasts. In this way, Pryzm not only simplifies yield management, but also expands the strategic options for DeFi participants, marking an important step forward in the development of the industry. References show that IRDs are the most dominant financial derivatives in traditional finance.

Source: BIS OTC Derivatives Statistics

Additionally, Pryzm has developed specialized modules to take yield trading to the next level. For example, Pryzm’s Weighted AMM (WAMM) is able to customize pools to support custom weights such as 80/20 or 60/20/20. This is particularly interesting for LSTs, because in a 50/50 pool, half of the assets will not generate yield. When this 50/50 split becomes an 80/20 pool, only 20% of the assets do not generate yield, which will incentivize liquidity more cost-effectively.

Source: Pryzm Medium

Other tools include PulseTrade, a dollar cost averaging (DCA) module that helps users reduce price impact by investing small amounts at regular intervals. Users simply set up their plan by specifying the total amount to invest in a specific time interval, and the system will take care of the rest for them. For example, you can redeem $1 of USDC for ATOM every minute for 100 minutes, and you can also set execution price limits to take advantage of price fluctuations. This will allow users to stipulate that if the price of an asset falls below a certain level, they want to take advantage of this drop and complete the remaining investment amount in one go.

Source: Pryzm Medium

Value Proposition

Pryzm's value proposition lies in its comprehensive ecosystem designed for yield optimization, providing users with unprecedented control to optimize their yield across multiple assets. Unlike other DeFi projects that focus solely on packaging yield-generating assets into capital tokens (pTokens) and yield tokens (yTokens), Pryzm takes a multifaceted approach to yield management.

As a Layer-1 network, Pryzm does more than just tokenize and facilitate trading of future returns. It also empowers pToken and LST holders with liquidity governance rights, implements a time-weighted average price (TWAMM) mechanism to reduce price impact, and introduces the concept of “reinvestment” or “proof of liquidity,” allowing users to stake their LP tokens to secure the network and earn additional returns (from $PRYZM inflation emissions and network activity fees).

Source: Pryzm Medium

As a unique Layer-1 chain, Pryzm provides access to fixed income and derivatives markets, establishing itself as a versatile platform for yield-related strategies in the universe. Users benefit from being able to cope with yield fluctuations in a variety of activities - such as earning interest, collecting LP fees, participating in staking and re-staking - to secure returns, purchase assets at a discount, and participate in governance.

Source: Revelo Intel

  1. Staking the native asset on the Cosmos chain and wrapping this position into LST allows you to continue earning staking rewards while unlocking liquidity for further use in DeFi.

  2. Use LST to provide liquidity to Pryzm’s yield AMM, providing liquidity to the platform and earning additional income through swap fees in exchange for facilitating yield trades between fixed and floating rate takers.

  3. Finally, stake the LP tokens you receive from providing liquidity into the Yield AMM to earn block rewards and chain income from staking and securing the Pryzm chain itself, providing you with additional income.

Following these steps, users can effectively take advantage of three different sources of yield: LST rewards, exchange fees for providing liquidity to Pryzm’s YAMM, and Pryzm’s block rewards and chain revenue earned by staking LP tokens as PoS assets.

Pryzm Yield AMM provides users with tools to manage risk and take advantage of yield volatility. Borrowers in the money market can fix borrowing costs, arbitrageurs can profit from interest rate differences in underlying assets, and speculators can go long/short on future income generated by yield-generating assets like LST. This system not only maximizes return potential, but also stabilizes investment results, accommodating both conservative investors seeking fixed income and investors seeking higher returns through variable income.

This creates a market that meets the needs and preferences of users with different risk appetites: liquidity providers earn additional income through swap fees, yToken buyers gain leveraged exposure to the yield generated by the underlying, and pToken buyers can earn a fixed interest rate or purchase assets at a discount.

Industry Outlook

The industry outlook for yield tokenization and trading is very positive. While the FX market is huge, it pales in comparison to the interest rate swap (IRS) market. Fixed income represents the largest asset class globally, and yield derivatives are the largest derivatives market. First, interest rates are an excellent tool to express market views because they are extremely sensitive to changes in supply and demand. Second, savvy participants always need tools to manage risk, such as locking in interest rates or using derivatives to insure against adverse interest rate movements.

Institutions and hedge funds have historically profited from yield trading, as shown above, but Pryzm aims to democratize this lucrative market and make yield trading accessible to everyone. Tokenization of yield opens up endless opportunities, allowing users to sell future income for immediate cash, lock in guaranteed income, or take advantage of expected yield growth.

As the only player in the Cosmos ecosystem focused on yield tokenization, Pryzm enjoys a competitive advantage with zero direct competitors. Platforms like Pendle on Ethereum, with a total value locked of over $2.55 billion, demonstrate the market demand for yield tokenization and trading. The potential to expand yield trading within the Cosmos ecosystem with Pryzm as a cross-chain yield hub represents a significant and highly scalable opportunity - connecting numerous Layer-1 chains secured by staking. Pryzm's base functionality also solves common challenges in staking, such as long unstaking periods, and provides users with instant access to their assets.

Unlike traditional models that rely solely on asset prices, Pryzm's Total Addressable Market (TAM) is a function of market capitalization multiplied by yield. This means that as more blockchains are integrated into the Cosmos ecosystem, bringing more assets and Liquid Staking Derivatives (LSDs), the TAM will expand accordingly. In addition, the model benefits from appreciation in token prices and yields, both of which together drive overall TAM growth. This approach not only enhances Pryzm's appeal, but also enhances its utility by eliminating regular unstaking periods and allowing instant redemption of the underlying tokens, thereby alleviating a common pain point for yield seekers.

Market opportunities and challenges

Yield tokenization and trading can tap into the huge potential of the on-chain fixed income market. By creating a market for yield and governance, Pryzm not only enhances the value proposition of DeFi, but also solves the challenges inherent in the market, such as yield volatility and asset lock-up. This approach also solves some of the limitations that existed in the Cosmos ecosystem before Pryzm was founded, such as the lack of voting rights for LSTs and the 21-24 day unstaking period.

Pryzm’s utility not only improves liquidity conditions in the universe. Yield stripping and trading also unlocks opportunities such as repurchase agreements, fixed-to-floating treasury strategies, and one-time payments using future yields. This not only expands the utility of yield tokens, but also introduces a liquid governance market that rewards participants for voting activity.

Source: Pryzm Medium

Additionally, this business model facilitates positive-sum competition with other protocols by allowing their native tokens to be tokenized and traded on the Pryzm Automated Market Maker (AMM). This composability enhances the use cases and utility of tokens from other Cosmos chains, providing flexibility for users with different preferences, such as yield speculation, arbitrage, hedging, and fixed income opportunities.

Inspired by the recent success of Pendle on Ethereum, we may expect similar opportunities to emerge on Cosmos. Most notably, the Cosmos ecosystem is characterized by high PoS returns and heated debates around inflation rates and emission policies of certain Cosmos chains. These discussions often lead to fluctuations in expected returns, providing fertile ground for fixed and variable return trading strategies, even when the price of the underlying asset remains stable.

Governance dynamics are also particularly relevant in the Cosmos ecosystem, and Pryzm can amplify exposure to these opportunities by implementing the pGOV module. Thanks to leveraged voting, users can exercise voting influence disproportionate to their actual asset holdings, further democratizing the governance process. This breaks down traditional power dynamics by preventing validators from monopolizing and ensuring a more equitable distribution of decision-making power. In this way, Pryzm not only maintains liquidity for users, but also monetizes voting through liquidity governance, opening up new avenues for generating revenue through liquidity governance.

For example, by staking assets on Pryzm, users typically give up direct voting rights on those original chains. However, Liquid Voting regains those rights by mapping governance proposals on the original chains onto Pryzm, allowing users to participate in governance through their cAssets and pAssets. Votes cast on Pryzm will effectively be reflected on the original chain, ensuring that user participation maintains influence. Additionally, Pryzm introduces the concept of leveraged voting rights, amplifying the influence of each voter beyond their nominal share of staked assets. For example, if Pryzm holds 100 $ATOMs and only five holders of $pATOMs choose to vote, their voting power will be amplified, enabling them to vote as if they each controlled 20 $ATOMs.

Looking ahead, the expansion of the Cosmos ecosystem as new chains are launched will introduce additional assets like $DYDX, $TIA, $DYM, or $SEI into the yield trading space. This diversification enriches the ecosystem and provides a wider range of opportunities for yield traders to explore. The more chains that are launched on Cosmos and the more assets in circulation, the larger the TAM of Pryzm. In addition to this, Pryzm is not limited to IBC chains on Cosmos; it can also enable yield trading of any auto-compounding LST like wstETH or jitSOL through the Axelar or Wormhole cross-chain bridges. This functionality will be available at launch.

Favorable conditions for wider adoption

Over time, we are beginning to see oversaturation and lack of differentiation in market segments such as lending, perpetual contracts, and stablecoins. However, their common needs are the pursuit of leverage and yield. We believe that in such a crowded space, yield tokenization and trading will benefit from wider adoption of current narratives and similar projects.

First, projects that extend the functionality of existing tokens and enhance the value proposition of their corresponding platforms offer strong proposals for composability. This is often reflected in enhanced revenue opportunities, synergies and benefits to both parties, and long-term partnerships.

Second, projects that are not reliant on the success of a single ecosystem or project have a strategic advantage. Often, being tied to the success of a single platform carries significant risk. Projects that are able to abstract away complexity and provide “primitives” that can adapt to any asset demonstrate resilience and flexibility, attract a wider user base, and mitigate the risks associated with the volatility of a single ecosystem.

Finally, the clear value proposition offered by Pryzm ensures that all participants benefit from it, promoting a collaborative environment conducive to mutual growth. This inclusive approach is likely to drive adoption and user retention, and all participants will benefit from their participation in Pryzm, maximizing their earning potential and governance utility of their token holdings.

Pryzm embodies all of the key factors mentioned above, promotes wider adoption, and demonstrates a “primitive” that can provide significant value in every dimension. The ability to create pools for any DeFi yield-earning asset or staking token highlights this foundational strength. This versatile way of absorbing liquidity also does not weaken the underlying projects. Instead, it increases the total value locked (TVL) of projects within its ecosystem without draining their resources, demonstrating clear value-add for all parties involved.

Strategic Growth and Its Impact on $PRYZM

One particularly noteworthy aspect of Pryzm's strategy is that it deliberately chose to forgo venture capital (VC) funding in favor of a community-centric growth model. This decision stems from a philosophical understanding that VC involvement could unduly concentrate token ownership, contrary to the spirit of DeFi. As a result, Pryzm opted for a community airdrop designed to spread ownership across a wider range of stakeholders.

In contrast, Pryzm deviates from the traditional Layer-1 blockchain revenue model that relies heavily on transaction gas fees. Instead, it has pioneered a diversified revenue structure that leverages multiple sources that reflect its innovative products:

Staking Revenue Share: By facilitating the staking of multiple tokens (e.g. $ATOM, $INJ, $OSMO, $TIA), Pryzm receives a share of the revenue generated by these assets. This mechanism not only supports the broader blockchain ecosystem, providing liquidity and security, but also creates ongoing income for the network by collecting revenue from cTokens and yTokens.

Swap Fees: The platform’s AMM levies a nominal fee on swaps, contributing to Pryzm’s revenue. By leveraging Skip Protocol’s Block SDK, the fair distribution of MEV proceeds is further enhanced without compromising network security or user experience.

Token Restaking Tax Rate: Pryzm levies a modest tax on tokens that are re-staked within the network, specifically tokens delegated to Pryzm validators. This “fee rate” is applied to various yield pool tokens, creating an additional revenue channel.

Source: Pryzm Medium

The Pryzm Treasury is dedicated to optimizing and leveraging the revenue streams generated on the platform, integrating yield-bearing assets and LP tokens that empower the Pryzm protocol with owned liquidity (POL). $PRYZM token holders are responsible for ensuring that the deployment of these assets is in line with the collective vision and needs of the community.

Some initiatives may include:

Value Preservation: Holding funds within the treasury to protect their value and ensure the long-term financial stability of the network.

Supply Management via Buybacks and Burns: Buybacks and subsequent burns of $PRYZM tokens are conducted to reduce the total token supply, thereby potentially increasing the scarcity and value of $PRYZM.

Reward Loyalty: Buy back $PRYZM tokens and distribute them to stakers as a reward for their loyalty and continued support of the network.

Community Pool Contribution: Allocate PRYZM tokens to the community pool, thereby directing resources towards the development of public goods and the broader ecosystem.

Source: Pryzm Medium

in conclusion

Pryzm is setting a new revolutionary stage for how returns are generated, managed and traded on-chain. This commitment to unlocking fixed income and improving yields gives it a significant advantage. Through Pryzm, investors are able to access a versatile platform that not only enhances their yield strategies but also contributes to the broader growth and stability of the entire DeFi ecosystem.

Our thesis is simple: a maturing market requires sophisticated tools that drive demand for rapid adoption of LSTs, LRTs, and other yield-bearing assets. Introducing an application chain for yield trading is Pryzm’s response to this demand, providing DeFi with a mechanism to meet the needs of a wider range of investors.

References

 

  • Pryzm Homepage

  • Pryzm Docs

  • Pryzm Blog (Medium)

  • Pryzm Notion

  • Pryzm Stakedrop Details

  • Pryzm Testnet

  • Pryzm X

  • Pryzm Discord

  • Pryzm Telegram

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This content is provided for educational purposes only and does not constitute financial or investment advice. You should conduct your own research and only invest what you can afford to lose. We are a research platform, not an investment or financial advisor.

Source of information for this article: Revelointel