Zero Value at Maturity

As mentioned earlier, YTs have no redemption value at maturity – their value derives entirely from yield accumulated during the holding period. This creates both practical and operational considerations for YT holders.

Understanding Terminal Value Dynamics

As maturity approaches, YT prices typically decline toward zero, reflecting the diminishing future yield stream. However, this doesn't mean the investment becomes worthless:

• Throughout the YT holding period, yield accrues to the YT holder

• These accrued yields must be claimed through the FIVA dashboard

• The total return on a YT investment combines price changes, claimed yields and future airdrops received from underlying protocols

This system creates a unique investment where progressive yield claiming is an essential part of realizing returns, rather than relying solely on token price appreciation.

Operational Management Requirements

The yield claiming mechanism creates operational requirements that YT holders must understand and manage:

• Yield claiming is a manual process requiring interaction with the protocol

• Monitoring and managing claim timing can impact overall returns

• There may be optimal claiming strategies based on gas costs and reinvestment opportunities

Unlike many passive crypto investments, YTs require this additional operational engagement to fully realize their value, creating what could be considered a form of "management risk" if these requirements are overlooked.

End-of-Life Considerations

As YTs approach maturity, several important risk considerations emerge:

• Liquidity typically deteriorates as maturity approaches

• The market price and fundamental value may diverge in the final days

YT holders should have a clear exit strategy that addresses these end-of-life considerations well before the maturity date arrives.

Risk Management Strategies for YT Holders

Given the unique and complex risk profile of YTs, holders can benefit from several targeted risk management strategies:

For Managing Terminal Value and Claims:

• Develop a consistent yield claiming strategy that balances gas costs against reinvestment benefits

• Have a clear plan for the final weeks approaching maturity

By understanding these complex risk dynamics and employing targeted management strategies, YT holders can make more informed decisions about how these innovative but volatile instruments might fit within their broader investment approach.