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Principal Tokens and Yield Tokens
We have introduced a new program which tokenize the position that deposited into our variable rate lending program into principal tokens and yield tokens.
  • Principal Tokens: maps one-to-one to the underlying token
  • Yield Tokens: maps to the actual yield of the underlying protocols over the period
  • Maturity: the time after which users are allowed to perform the redemption
In order to make the yield token fungible with each other, we reduce the amount of principal token released when minting to take into account the interest that've already accrued to make sure that the yield tokens are fungible.
For example, when user deposit 1000 USDC, they might receive 999 principal USDC and 1000 yield USDC. This will happen when the interest between pool start to the moment that user deposit is already 0.1%. At this point, we are sure that the 1000 yield token can redeem for 1 USDC. Adding up with 999 principle USDC which can be redeemed for 999 USDC, this adds up to 1000 USDC. If we don't do this reduction, then yield token will not be fungible.
Last modified 1mo ago
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