About a year ago, we led the $2.1 million funding round of Exponent Finance, a yield-stripping platform on Solana that offers fixed-rate and leveraged yield farming. As one of the few firms to run both venture and onchain yield strategies for over four years, this one was a “hell yes” from both sides of the house.
Our credit team seeks superior fixed yield opportunities, and our conviction that Solana will house institutional DeFi led us to believe that a fixed income offering on the chain was imminent. In this way, our partnership with Exponent has been uniquely hands-on. We wrote the venture check, weighed in on product decisions, and served as the platform’s anchor liquidity provider, bootstrapping capital in early markets.
So far, the thesis is playing out nicely. Exponent has scaled capital and proven that its approach of quickly launching markets for novel and growing onchain assets, like Perena and OnRe’s ONYc, is a winning formula.
Read more on our thinking below.
DeFi’s Growing Up Era
DeFi has grown up and is ready for real scale. DeFi Summer’s 60%+ first-month returns and the viral points campaigns that followed have given way to a more mature market, with varied products for different risk appetites, and the security, UX, and portfolio management requisites of sophisticated capital allocators.
Recovering from an average 5.8% APR for stablecoins weighted by TVL in April, rates now sit at 10.31%, spurred on by relief from regulatory pressure, growing institutional participation, RWA-spurred product innovation, and a more balanced market sentiment.
The mood is best described as cautiously optimistic.
Although today’s yield environment is far less dramatic than in past cycles, it reflects a more durable phase of DeFi’s development. The industry’s maturity is increasingly visible on Solana, where the chain’s performance at scale has enabled a 41% growth in DeFi TVL in 2025 alone and made it the prime breeding ground of new markets. These markets, defined by real-world, stable, and predictable yield opportunities, form at the intersection of traditional and onchain finance.
Within this yield trend, initiatives such as the launch of xStocks, the introduction of tokenized reinsurance as collateral, and the upcoming mainnet debut of private equities on Earlybird have drawn meaningful investor interest. We expect this trend to continue, and have positioned ourselves accordingly, investing in protocols that exemplify and contribute to the new wave of DeFi maturity. Among these, fixed income has stood out as an opportunity to cultivate a richer yield landscape and, until recently, a gap in the market.
In TradFi, fixed income is like eating your vegetables; it’s not the sexiest stuff, but it offers predictable returns and gives investors a way to balance risk in their portfolios. Bringing that structure onchain serves the same purpose, introducing more choice and predictability into markets that have often been volatile.
Unlocking Solana’s Fixed Income Markets
Our belief that onchain fixed income on Solana was imminent is why we were lead investors in Exponent.
Since its launch last year, the project has become one of Solana’s fastest-growing Defi protocols. It reflects the type of market maturity we believe is needed: yield opportunities that are safer, more consistent, and can scale institutional capital onchain.
Exponent’s introduction of fixed income trading to Solana came through a yield-stripping model similar to Pendle on Ethereum. The mechanism involves a yield-bearing instrument, such as a bond or restaked ETH, which consists of two distinct, tradable assets: the principal repayment and the stream of interest payments. Principal Tokens (PTs) appeal to conservative investors seeking lower risk and stable returns, while Yield Tokens (YTs) provide exposure to the variable, and often higher, yield stream.
This separation enables investors to manage more sophisticated portfolios onchain with institutional-level risk management. It’s a new level of structured yield trading where participants can hedge risk by selling YTs, lock in stable returns by holding PTs to maturity, gain leveraged exposure by buying additional YTs, and convert variable yields into fixed-rate positions.
To learn more about yield stripping on Exponent, read our original Exponent investment thesis.
Recognized for its clean, intuitive platform design and integrations with Fragmetric (another of RockawayX’s portfolio companies), Perena, and more, Exponent attracts users seeking its core value proposition of fixed income and institutional-grade risk management, while also offering utility to airdrop farming participants through its Farm page.
Exponent has grown its TVL from $7.7 million in February 2025 to a recent peak of $132 million in July. TVL dipped to $50m after a dominant market on the platform expired. While that’s less than ideal (we’d have liked it if the capital was immediately rotated into other opportunities), its success revealed investor appetites, and we have confidence that the market will be swiftly replaced–and some.
One new market we’re especially excited about (and helped facilitate) is with OnRe, another RockawayX portfolio company, which has shown it can attract yield-seeking capital, surpassing $1 million in USDC deposits on Loopscale within 24 hours and crossing $6 million in deposits on its Kamino ONyc Reserve.
OnRe’s ONyc asset offers uncorrelated returns to crypto volatility by underwriting real-world products, starting with regulated reinsurance. By integrating ONyc into Exponent, users have two options: get predictable returns (fixed yield of ~13%) on ONyc, or opt to favor project upside via depositing ONyc for YT-ONyc, which provides leveraged exposure (each YT-ONyc receives 4x OnRe points and continuous yield distributions).
Users can also provide liquidity to ONyc’s Exponent yield market to earn extra yield through reinsurance premiums and collateral interest, PT-ONyc fixed yield, swap fees, and OnRe points.
With OnRe growing depositors and followers, the timing of the release is ideal, and the team is enthusiastically steering their early adherents to Exponent.
If Exponent can continue to select promising projects and nail the market launch timing (i.e., tap those projects’ momentum), it will have a winning model.
RockawayX’s Role In Scaling Exponent
When we first came across Exponent, the project was an easy yes. The founders are real Solana natives—early contributors to the ecosystem with experience at its top DeFi projects.
More importantly, Exponent aligns seamlessly with our VCIII fund thesis: that onchain yield represents crypto’s third killer use case, following trading and stablecoins. The success of the latter, and other money market solutions, leaves us optimistic that users will bring more of their financial lives onchain and manage increasingly sophisticated portfolios. As that happens, they will seek products offering diversified risk and return profiles, like fixed income solutions.
Indeed, we are managing a sophisticated portfolio onchain out of our credit fund, so we felt this market gap acutely. The Exponent team delivered the product to our liking, and we committed as an early liquidity provider, bootstrapping capital in the first markets. Yield managers are a small and (more than VCs) collegial bunch, so we swiftly referred our closest co-investors to the platform; today, several are scaling participation.
Finally, because selecting and launching new markets is the key to Exponent’s success, we aim to be the team’s ‘eyes and ears’ in venture markets, referring novel and rising onchain products in our midst.
Building The Fixed Income Foundation For Solana’s Institutional DeFi Era
We believe Solana is primed to dominate institutional DeFi. As with marketplace models, we see a chicken-and-egg dynamic at play: the ecosystem offering the most competitive products will draw institutional allocators, and in turn, builders and asset issuers focused on this segment will gravitate toward the platforms where those allocators—and their capital—are active.
Exponent is spearheading Solana’s fixed income sector. If it can deliver the best experience in this category, it will play a critical role in accelerating institutional DeFi more broadly.
For RockawayX, Exponent’s early success validates our conviction that onchain yield is crypto’s third killer use case. As the project’s most hands-on backer, we remain committed to supporting its growth and advancing the broader maturation of Solana DeFi into a durable, institutional-grade market.
