Glossary
Core Concepts
Principal
The assets or capital that you put into a DeFi protocol to generate returns. This is essentially the money you lock up at the platform to receive yield (returns) - like depositing TON into a staking protocol or providing USDT to a lending platform.
Yield
The returns generated by your principal over time in selected DeFi platform. These returns come from various sources like trading fees, validator rewards, lending interest, or protocol incentives and depends on the protocol. Think of it like rent from a property you own - your principal is the property, yield is the monthly rent payment.
Yield-Bearing Token (Underlying Asset)
A token issued by DeFi platforms that grows in price because it generates and accumulates yield compared to the principal. The yield sources vary but usually come from fees, incentives, or points. Examples of yield-bearing tokens:
tsTON: Yield from validator staking rewards
Storm SLP: Yield from trading fees and liquidations
tsUSDe: Yield from funding rate basis trades
etc.
Yield Tokenization
The process of separating a yield-bearing asset into two parts: the principal and the yield. Think of it like separating an apartment into apartment ownership and rent payments - you can now trade the apartment value separately from the rental income. This separation happens for a set time period called maturity. The process splits one yield-bearing token into two separate tokens: PT (representing the principal allocated to underlying protocol) and YT (representing future yield rights).
Underlying Protocol
A DeFi service or platform that generates yield by taking principal and issuing yield-bearing tokens. Basically, it's the project that creates the yield. Examples include Tonstakers (staking), Storm Trade (perpetuals), or Ethena (basis trading). When you hold yield-bearing assets from them, you take on the risk of that platform.
Maturity
The date when Principal Tokens (PT) can be fully redeemed for the underlying asset and Yield Tokens (YT) stop generating yield. Different assets can have multiple maturity dates, each with independent markets.
SY - Standardised Token
A standardized wrapper that creates a unified interface for different yield-bearing tokens. Think of it as a translation layer that makes all yield-bearing assets "speak the same language" to FIVA's protocol.
You don't see or directly interact with SY tokens - they work behind the scenes in all FIVA transactions and engine operations. This standardization is essential because it enables seamless integration of new protocols into FIVA. Without SY, it would be extremely difficult to integrate each new yield-bearing token with different mechanics.
PT - Principal Token
Represents the principal portion of a yield-bearing asset. PT tokens are created when you mint PT + YT tokens from SY tokens until some maturity date. FIVA then creates a Yield Market through our AMM where you can buy/sell PT tokens. When you buy PT tokens, you essentially get fixed yield (or you can think of it as shorting yield).
Key Features:
Purchased at a discount to face value
Provides fixed yield by appreciating to full value at maturity
Can be traded anytime before maturity
Similar to zero-coupon bonds in traditional finance
Example: 1 PT-tsTON with 1-year maturity allows you to redeem 1 TON worth of tsTON after one year.
YT - Yield Token
Represents the yield rights of a yield-bearing asset. YT tokens are created alongside PT tokens when you mint from SY tokens until maturity. Through FIVA's Yield Market, you can buy/sell YT tokens. When you buy YT tokens, you get effective exposure to future yield (or you can think of it as going long on yield).
Key Features:
Accrues yield continuously until maturity
Provides effective exposure to yield without liquidation risk
Can be traded anytime before maturity
Similar to detached bond coupons in traditional finance
Example: 1 YT-tsTON earning 5% annually will accrue 0.05 tsTON over one year.
Underlying APY
The return (yield) that you will get if you receive it for one year from the underlying protocol. This is basically the annual return rate of the DeFi protocol that issued yield bearing asset without any compounding effects. Usually vary volatile and constantly changing.
Fixed APY
The guaranteed yield earned by holding PT tokens until maturity, reflected in the principal token (TON, USDT, etc.). This rate is fixed when you buy PT through FIVA AMM and represents the return you're guaranteed to receive if you redeem PT tokens after maturity.
You will receive the underlying token, but the amount you get reflects the principal yield you were promised at purchase. For example, if you buy PT-tsTON at a 10% Fixed APR, you're guaranteed that 10% return in TON terms when you redeem at maturity, regardless of how the underlying yield fluctuates during the period.
Trading & Strategy Terms
Long Yield
Buying YT tokens to bet that future yields will be higher than the current market price. Profitable when actual yields exceed the Fixed APY you paid for.
Short Yield (Hedging)
Using PT tokens to protect against declining yields. By locking in fixed returns, you hedge against the risk of yields falling below current levels.
Liquidity Provision (LP)
Supplying tokens to FIVA's AMM pools to earn trading fees and protocol incentives. LP providers help maintain market liquidity for PT and YT trading.
Impermanent Loss
The potential loss liquidity providers face when token prices change relative to each other. In FIVA, there's no impermanent loss if LP positions are held until maturity.
AMM (Automated Market Maker)
Smart contract that serves as an automated market maker. Instead of using an order book to exchange PT/YT and underlying tokens, you can exchange them using FIVA AMM. Liquidity is provided by LPs who earn trading fees and rewards. Basically, it's a place where you can buy/sell PT/YT/underlying tokens or provide liquidity. It's uniquely designed to enable swaps between 3 tokens - PT/YT/underlying - in a single pool.
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