Tokenizing Yield
Last updated
Last updated
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.
PTs are designed to operate with any ERC4626 Tokenized Vault token.
Explore the APY of any ERC4626 with Vision.
To find a relevant PrincipalToken:
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.
Before the expiry/maturity, a YT/PT holder can:
Trade or sell YT to hedge interest rate risks.
Trade or sell PT, speculating on interest rates without exposure to the principal asset.
After expiry/maturity, the token holder could:
Each Principal Token is associated to an and has a specific duration (a specific expiry date).
Each IBT is associated to an underlying. The underlying assets of the IBT are verified using
Available ERC4626 Vaults on the relevant network can be found at . Additionally, new Principal Tokens for any Interest Bearing Token that complies with the ERC-4626 standard can be deployed without the need for special permissions, see.
Make informed decisions and visit to gain access to the Vision API and dashboard, and to explore the historical interest rates of any ERC4626.
All Principal Tokens deployed using the can be accessed through the . The number of tokens deployed is determined using . The PT at each index from 0 to ptCount
is retrievable using .
The correctness of the address for the Interest Bearing Token (IBT) tokenized in the PT contract is ensured by using the method. , and the yield rate is ascertained either by visiting or by examining the conversion rate over the last few blocks using .
The maturity and duration of the PT are checked using .
Deposit either the underlying asset (e.g. USDC) or an of the underlying asset (e.g. aUSDC).
If depositing the underlying asset, use PrincipalToken's .
If depositing the interesting bearing token, use .
Claim the yield generated by the YT, see
Earn additional yield by providing liquidity to the IBT-PT pairs on AMMs. See .
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 and .
Before expiry a user needs the same amount of PT and YT to be able to or .
Redeem the underlying assets of the PT, see and
Claim the remaining yield of the YT see .