Introduction

Introduction to Napier Finance Version 2

The Napier Finance Version 2 is a modular yield tokenization protocol enabling users to fix, trade yield and curate yield on the Ethereum Virtual Machine. The protocol is implemented as immutable smart contracts, designed to function as a trustless base layer for users and applications.

Napier v2 is licensed under GPLv3 which you can find github.com/napierfi/napier-v2-public. Once deployed, Napier will function in perpetuity, provided the existence of the Ethereum blockchain.

Background: DeFi Becoming Backend

DeFi is shifting into a fully B2B2C backend model, with DeFi-focused hedge funds on the rise. The main focus now is creating foundational platforms that let fintech companies, hedge funds, and DeFi projects freely build financial products. Uniswap v4, Lido v3, Aave v4, Euler, Morpho, Mellow, Yearn v3, and Veda all embody this trend, integrating fintech and hedge funds as asset managers or enabling DeFi projects to build in-house solutions. This is expected to expand end-user options and benefits. The market climate is changing dramatically, and the entire DeFi ecosystem is undergoing renewal.

However, some sectors have yet to adapt to this shift—Yield Tokenization.

Problem: Unscalable Yield Tokenization Model

Pendle’s relative success is undeniable. Its core team’s approach to managing a complex product was highly effective, growing from $0 to $10 billion.

However, exclusive management (self curation) by a core team or DAO for such a complex product does not scale. As the market and user base expand, the workload and costs grow, revealing structural flaws that limit scalability.

While permissionless products (i.e., non curation like Spectra) aid scalability, they are not sufficient on their own. Users still demand feature-rich, efficient solutions.

For example, Pendle is already permissionless at the contract level, allowing anyone to create their own market, but the fact that its UI isn't yet permissionless demonstrates this limitation. They plan to make the UI permissionless as well, but it's extremely difficult for pool creators to properly meet all user demands by determining factors like yield ranges and initial implied APY due to limited experience and information. If more complex DeFi integrations are involved, it's even more challenging.

Even combining the best of both doesn’t resolve the fundamental issue—there’s still a conflict of interest.

Thus, from both economic and governance perspectives, a solution is needed to resolve misalignments between users, curators (market managers), and the platform regarding scalability. This is where Napier v2 (“Crowd Curation”) comes in.

Pendle - Comparison of the amounts of fees and incentives

Solution: Napier Finance V2 - Scalable Yield Tokenization

At Napier, we are building a modular yield tokenization platform that gives you complete freedom to launch a feature set offering yield trading, fixed-rate lending, fixed-rate borrowing, and more.

That provides:

• Open: a fully open-source codebase

• Economical: a market-based business model that rewards active commitments

• Flexible Authority: a market-based, selectively flexible authority control

• Permissionless: a compatibility with 99.9% of yield sources

• Immutable: a codebase that cannot be altered by anyone

• Seamless: no extra development required

• Everywhere: available on nearly all EVM chains

Use Case for Curators

From banks and DeFi projects to KOLs, the potential for Napier v2 curators is boundless.

1. Financial Institutions and Fintech Companies

• Develop on-chain yield products compliant with regulations and standards.

• Launch pilot programs for institutions to explore on-chain opportunities.

• Generate revenue through on-chain asset and yield curation.

• “Fintech in the front, DeFi in the back”: Offer attractive returns on idle customer assets by tapping into on-chain demand for leverage, while monetizing through PT and YT curation.

1. DeFi Projects and DAOs

• Implement sustainable growth strategies by providing users with additional earning opportunities that leverage existing product expertise, sales channels, and growth plans.

• Use incentives to boost supply of yield-bearing assets, drive curation revenue, and strengthen financial health.

1. Hedge Funds

• Combine on-chain asset curation (e.g., lending, restaking) with yield product development to gain new revenue streams, reduce costs, improve margins, and enhance flexibility.

• Deliver efficient yield trading by leveraging generalized liquidity engines.

• Develop AI curators to manage and optimize on-chain asset parameters.

• Set benchmark rates and distribute them via oracles.

1. User-Facing Applications and Yield Aggregators

• Support decentralized frontends and integrate yield aggregator strategies.

• Simplify on-chain asset management to foster broader adoption.

• Provide additional utilities (e.g., fixed returns, new earning avenues).

• Offer an all-in-one dashboard to consolidate various asset curation tasks.

• Monetize proprietary risk analysis and yield optimization strategies.

1. Game Projects and Companies

• Gamify yield management strategies to speed up on-chain wealth management adoption.

1. KOLs and Marketing Agencies

• Use a protocol-level referral program to leverage promotional channels and marketing expertise, driving distribution and revenue.

Size of the Opportunity

• $200B: Yield in DeFi (DeFiLlama's data as of February 2025)

• $400T: IRDs in TradFi (BIS's data as of August 2024)