๐Ÿ’ฒYield Tokenization

Yield-bearing Tokens refer to any tokens that generate yield for users whether they are restaked assets like stETH, LST, or other types of yield-bearing tokens. On QuantoSwap, you can earn Standardized Yield โ€“ yield from depositing funds into a yield source โ€“ as well as income from Principal Tokens and Yield Tokens. Let's explore each type of yield.

Standardized Yield (SY)

Standardized Yield is a token standard that implements an API for wrapped yield-bearing tokens within smart contracts. Any yield token can be wrapped into SY, opening up the tokenization mechanism for all tokens available on QuantoSwap. You can thus wrap the LST and LRT into SY.

Additionally, Principal Tokens (PT) and Yield Tokens (YT) are created from SY. QuantoSwap mechanisms allow for easy conversion of tokens into SY and vice versa. This simplifies DeFi integration into applications and enables the creation of applications based on existing contracts without the need for manual contract integration.

Principal Token (PT)

The Principal Token (PT) represents the principal portion of an underlying yield-bearing asset. Upon maturity, you can exchange PT for the underlying asset at a 1:1 ratio. For example, 1 stETH can be exchanged for 1 ETH.

The advantage of a PT is that it can be acquired at a discount compared with the underlying asset, and if you refrain from making exchanges, eventually the value of the PT will align with that of the underlying asset. The final value of the PT will determine its fixed yield.

Yield Token (YT)

This token is also one of the components of the underlying asset's yield. Users holding YTs can earn income from the underlying asset at the APY rate.

This provides an opportunity to earn long-term income from the asset, especially when the income exceeds the cost incurred to acquire the YT. YT yields, in turn, are distributed as SY, which you can unwrap according to the principles outlined in the โ€œStandardized Yield (SY)โ€ section.

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