Overview

Managing yields with FIVA

In the world of DeFi, yield generation is a core component. Many DeFi protocols issue tokens that accumulate rewards/interest, known as yield-bearing tokens. FIVA takes yield optimisation a step further by providing next-gen tools to help users increase and manage their returns through:

• Yield Tokenisation

• Yield Trading

With FIVA, you have the flexibility to improve your yields in several ways, such as:

• Fixed APY: Lock in a stable yield over time

• Leveraged Yield Farming: Increase your yield with better capital efficiency

• Impermanent Loss-Free Liquidity Provision: Provide liquidity and earn extra yield without the typical risks associated with price fluctuation.

The Mechanics of Yield Tokenisation

Yield Tokenisation

FIVA enables a novel approach to yield management by splitting yield-bearing assets into two distinct components: the principal and the yield itself. This process, known as Yield Tokenisation, allows you to manage and trade these components independently for maximum flexibility.

• Principal + Yield = Yield-bearing asset

FIVA provides a marketplace where users can tokenise their assets, transforming them into separate tokens representing the principal and the yield, which can be traded individually.

PT & YT – Tokens Breakdown

FIVA divides yield-bearing tokens into two categories:

• Principal Token (PT):

The PT represents the underlying principal of the asset, which can be redeemed at the maturity date. PTs generally have a lower acquisition cost than the full value of the asset, and their worth increases over time, eventually becoming fully redeemable at 1:1 parity with the asset upon maturity. Investors earn a fixed yield by holding PTs, akin to the structure of a zero-coupon bond.

• Yield Token (YT):

YT grants the right to collect the yield generated by the underlying asset until its maturity. By purchasing YT at a fraction of the cost of the full asset, users can gain exposure to the yield and potentially earn a profit if the yield received exceeds the purchase price. YT enables leveraged yield exposure without the risks of liquidation or reliance on oracles. This mechanism resembles detached bond coupons in traditional finance.

Flexibility of Trading

Both PT and YT tokens are fully tradable on the FIVA marketplace before maturity. This gives investors the ability to adapt their strategies as needed, with no restrictions or penalties. The 24/7 tradability ensures constant liquidity and freedom to react to market changes at any time.

Key Takeaway

FIVA’s innovative approach to yield management combines stability and flexibility, empowering users to optimise returns while maintaining control over their yields.