Glossary

Yield

Yield refers to the earnings generated from an investment over a defined period. Within DeFi, yield typically represents the returns that users earn by staking tokens or providing liquidity in various protocols.

Principal

The principal is the initial capital invested in a financial product or protocol. In FIVA, users’ principal capital can be tokenised, allowing for more flexible yield management.

Yield-Bearing Token (Underlying Asset)

A Yield-Bearing Token refers to any asset that generates yield over time. Examples of yield-bearing tokens include stTON, tsTON, and LP tokens such as DeDust’s TON/USDT-LP. These tokens generate returns through underlying DeFi protocols. The underlying asset is tokenized into PT and YT in FIVA.

Base Asset

The Base Asset represents the fundamental asset against which the yield-bearing token appreciates in value. For tokens like stTON, stTON appreciete in price (increase in price) compare to the base TON that is staked in Bemo protcol. Other tokens like DeDust TON/USDT-LP have liquidity pairs in DeDust Protocol as their base assets. These tokens accrue yield by increasing in value relative to the TON/USDT in respective pool. Therefore, the base asset for these tokens is the base asset pair provided in the protocol.

Underlying Protocol

The Underlying Protocol is the DeFi platform that provides the yield-bearing tokens. It is where the core yield-generating mechanism occurs, such as Bemo for stTON or DeDust for liquidity pool tokens like TON/USDT-LP. FIVA tokenises assets from these underlying protocols to provide enhanced yield management options.

SY- Standardised Token

The SY Token is a standardised wrapper developed by the FIVA team to streamline interaction with various yield-bearing tokens. SY standardises the yield generation process, providing a unified interface for managing these tokens, although users typically interact with the yield-bearing token itself, not SY directly.

PT - Principal Token

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. For example, owning 1 PT-stTON with a maturity of one year allows you to redeem 1 TON worth of stTON after that period. Investors earn a fixed yield by holding PTs, akin to the structure of a zero-coupon bond. PT tokens can also be traded before maturity, allowing flexibility in asset management.

YT - Yield Token

Yield Tokens (YT) allow users to claim the yield generated by an underlying asset in real time. For instance, holding 1 YT-stTON allows you to accumulate yield based on the staking return of stTON. If stTON yields 5% annually, owning 1 YT-stTON would result in accruing 0.05 stTON over a year. YT enables leveraged yield exposure without the risks of liquidation or reliance on oracles. This mechanism resembles detached bond coupons in traditional finance. YT tokens are freely tradable before maturity, giving investors the opportunity to adjust their exposure to yield as needed.

Maturity

Maturity refers to the point at which a PT can be fully redeemed for the principal of the underlying asset, while YT stops generating yield. Different assets may have multiple maturity dates in FIVA, and each maturity has its own market and pool. This allows for variations in the FIVA yield rate based on the maturity timeline.

Underlying APY

The Underlying Annual Percentage Yield (APY) reflects the average yield rate of an asset over time in the underlying protocol. This value provides a clearer view of the asset’s performance and helps traders estimate future returns more accurately.

FIVA APY

FIVA APY is a fixed APY that you can get at this moment. It is a measure of the FIVA market’s projection for the future APY of underlying asset. It is calculated by comparing the prices of YT and PT in the pool. When paired with the Underlying APY, the FIVA APY helps traders develop informed strategies by providing insight into the expected yield.

Fixed APY

Fixed APY is the guaranteed yield that a user earns by holding PT until maturity. This value is numerically equivalent to the FIVA APY at the time the position is opened, ensuring a stable return.

Long Yield APY

Long Yield APY represents the estimated annualised return from purchasing YT at its current price, assuming the FIVA APY remains constant. This value can be negative if the future projected yield is lower than the cost of purchasing YT, highlighting the risks associated with speculative yield strategies.

Hedging

Hedging is a strategy used to manage risk by taking an opposite position in a related asset to reduce potential losses. With FIVA, users can hedge yield exposure by utilising Yield Tokens (YT) and Principal Tokens (PT). This helps manage and mitigate exposure to market fluctuations effectively through yield trading.

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