Tokenizing Yield
As mentioned in Getting Started, the fundamental concept of tokenizing yield means that the future yield generated is separated from the underlying principal asset. So if a yield of 3% is generated on 100 USDC after 1 year, the 3% yield (3 USDC) is the yield, and 100 USDC is the principal.

Step by step
1. Find a PrincipalToken
Each Principal Token is associated to an Interest Bearing Token (IBT) and has a specific duration (a specific expiry date).
PTs are designed to operate with any ERC4626 Tokenized Vault token.
Each IBT is associated to an underlying. The underlying assets of the IBT are verified using
ERC4626.asset()
Explore the APY of any ERC4626 with Vision.
Make informed decisions and visit vision.perspective.fi to gain access to the Vision API and dashboard, and to explore the historical interest rates of any ERC4626.
To find a relevant PrincipalToken:
All Principal Tokens deployed using the Factory can be accessed through the Registry. The number of tokens deployed is determined using
Registry.pTCount()
. The PT at each index from 0 toptCount
is retrievable usingRegistry.getPTAt()
.The correctness of the address for the Interest Bearing Token (IBT) tokenized in the PT contract is ensured by using the
getIBT()
method. , and the yield rate is ascertained either by visiting https://vision.perspective.fi or by examining the conversion rate over the last few blocks usingIBT.convertToAssets()
.The maturity and duration of the PT are checked using
PT.maturity()
.
2. Deposit
Deposit either the underlying asset (e.g. USDC) or an Interest Bearing Token of the underlying asset (e.g. aUSDC).
If depositing the underlying asset, use PrincipalToken's
deposit()
.If depositing the interesting bearing token, use
depositIBT()
.
3. Receive PT and YT
During the deposit, the depositor receives:
Principal Token (PT): This represents the original amount deposited, i.e. the principal amount. This is also referred to as 'shares' of the PrincipalToken.
Yield Token (YT): Minted by the PrincipalToken contract, the Yield Tokens represents the generated yield from the deposited principal. YT holders can claim the yield generated by the corresponding deposited IBTs over time as they hold the token.

4. Before expiry
Before the expiry/maturity, a YT/PT holder can:
Claim the yield generated by the YT, see
claimYield()
Trade or sell YT to hedge interest rate risks.
Trade or sell PT, speculating on interest rates without exposure to the principal asset.
Earn additional yield by providing liquidity to the IBT-PT pairs on AMMs. See Providing Liquidity.
Withdraw the equivalent assets in proportion to the amount of PT and YT they currently hold, i.e. convert their PT and YT to the underlying asset (e.g. USDC) and exit their position. See
withdraw()
andredeem()
.
5. After expiry
After expiry/maturity, the token holder could:
Redeem the underlying assets of the PT, see
redeem()
andwithdraw()
Claim the remaining yield of the YT see claimYield().
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