Yield Trading
Overview
Yield trading is an advanced strategy for experienced players who profit from market inefficiencies in TON's developing DeFi ecosystem. Your returns come from identifying mispriced yield expectations rather than simply earning protocol yields.
Two Trading Directions
Short Yield (Expecting Lower Returns)
When to use: YT tokens are overpriced or Fixed APR rates are too high
Options:
Best: Sell YT tokens (if you own them) - most capital efficient
Alternative: Buy PT tokens - less efficient but achieves same directional bet
Example: Protocol points create hype, someone buys YT with high price impact, pushing Fixed APR to unsustainable levels. You buy PT at inflated rates, expecting actual yields to be lower.
Long Yield (Expecting Higher Returns)
When to use: YT tokens are underpriced or new incentives aren't priced in
Options:
Best: Sell PT tokens (if you own them)
Alternative: Buy YT tokens - up to 100x more capital efficient than PT
Example: New incentives go live that aren't priced in, or someone bought PT with huge price impact creating temporary inefficiency. You buy cheap YT expecting higher actual returns.
Capital Efficiency Advantage
YT tokens are more efficient for trading inefficiencies because they move pool balance with up to 100x implied leverage. If you're betting on yield direction, YT gives you maximum exposure with minimum capital.
When you don't have the optimal token:
YT overpriced but don't own any → Buy PT instead
PT overpriced but don't own any → Buy YT instead
Exotic Strategy: Mint and Trade
Create new PT and YT tokens through minting, then sell whichever token you think is overpriced. This allows you to enter either side of the trade even without existing positions, but you'll be left holding the other token on your balance. For example, if YT is overpriced, you mint YT+PT, sell the overpriced YT, and keep PT in your balance.
How to Identify Mispricing
Benchmark: Underlying APR
Natural comparison: Compare Fixed APR to current underlying protocol yield
Fixed APR > Underlying APR: Market expects higher future yields (YT priced high)
Fixed APR < Underlying APR: Market expects lower future yields (YT priced low)
Points Factor Creates Volatility
Why YT prices are usually higher: They allow points farming, creating speculation and volatility.
The challenge: While comparing yields from staking, lending, or trading fees is straightforward, estimating point values is extremely difficult due to:
Uncertain airdrop timelines
Unknown airdrop sizes and participant counts
Unpredictable project valuations
Multiple unknown factors
The opportunity: Markets with hyped points create significant speculation and arbitrage opportunities, but require substantial knowledge and experience.
Trading Execution Examples
Scenario 1: YT Overpriced
Situation: High points hype drives YT prices up, Fixed APR shows 20% vs 8% underlying
Trade: Sell YT (if owned) or Buy PT
Profit: When market realizes actual yields won't sustain 20%
Scenario 2: YT Underpriced
Situation: New reward program announced, market hasn't adjusted, Fixed APR at 5% vs 8% underlying + additional points drop
Trade: Buy YT or Sell PT
Profit: When market reprices to reflect new rewards
Risk Warning
This strategy involves active trading with potential for significant losses. Success requires:
Deep understanding of underlying protocols
Ability to estimate fair value of points and yields
Strong risk management skills
Comfort with potential total loss
Strategy Requirements
Essential skills:
Ability to analyze underlying protocol fundamentals
Understanding of points valuation methods
Experience with market timing and inefficiency identification
Risk management for directional bets
Market advantage: Since TON DeFi markets are new, many interesting opportunities will arise as the ecosystem develops.
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