PT Risks

Before diving into the specific risks, it's important to understand what Principal Tokens (PTs) represent within the FIVA protocol. When a user deposits a yield-bearing asset into FIVA, that asset is tokenized into two separate components:

1. A Principal Token (PT) that represents the right to receive the original principal amount at maturity

2. A Yield Token (YT) that represents the right to receive all yield generated by the asset until maturity

Principal Tokens are designed to provide more predictability than the underlying yield-bearing asset, as their value should theoretically converge to a predetermined amount (the face value) at the maturity date. This property makes PTs similar in some ways to zero-coupon bonds in traditional finance, with their value generally becoming less volatile as the maturity date approaches.