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.
Yield Tokenization
The process of separating a yield-bearing asset into two components: the principal (underlying asset value) and the yield (future returns). This allows each component to be traded independently.
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 tsUSDe, tsTON, Storm SLP, stgUSD . 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 tsTON, TON SLP appreciete in price (increase in price) compare to the base TON that is staked in Tonstakers or Storm protcol.
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 Tonstakers for tsTON Storm for liquidity pool tokens like USDT-SLP. 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.
Fixed APY
Fixed APY is an 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 fixed APY helps traders develop informed strategies by providing insight into the expected yield.
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