Welcome to FIVA Academy – a series of articles for those who want to better understand DeFi and yield opportunities on TON.
Let's start with the basics: understanding yield and what FIVA does with it.
FIVA is a protocol on the TON blockchain that helps you manage your investment earnings, also known as yield. Yield is the income you make from an investment over time. In DeFi (Decentralized Finance), this often means the returns you get by staking tokens or providing liquidity to different platforms.
One of the most straightforward and popular examples of yield in crypto is through Liquidity Staking Protocols. Here’s how it works: You have crypto assets, like TON, and you want to put them to work to generate additional income. Instead of just holding your tokens, you can lend them out (provide liquidity) and in return, you earn interest (yield).
For instance, if you have 1000 TON, you could stake them in Tonstakers and earn 4% APY (Annual Percentage Yield). This means that after one year, not only can you get your initial 1000 TON back, but you also earn an additional 40 TON — bringing your total to 1040 TON.
This way, you grow your capital by investing in DeFi protocols. Yield is the backbone of DeFi, and it’s something every investor aims to maximize. This is exactly where FIVA steps in to help manage and optimize that yield.
At FIVA, we’re solving two key problems related to yield in DeFi:
-
Unpredictable Yield
-
Limited Capital to Farm Yield and Rewards
Unpredictable yield: Staking decisions are easier to make when you are guaranteed a fixed yield on your assets. Unpredictable yield becomes a problem and might scare off potential stakers because it adds risk.
If the yield goes down, the amount of money you earn decreases. This means you might earn less than expected because the yield isn’t fixed. This risk becomes more significant if you manage larger amounts of money and want more stability in your returns.
Limited capital: This becomes an issue when you believe in a protocol and want to increase your investment to earn more yield and rewards, but lack sufficient assets. However, FIVA makes it possible to maximize your capital and get as much yield and rewards as possible without needing a large initial investment.
FIVA solves these problems by bringing new use cases and added utility to the DeFi space. Rather than competing with existing protocols, FIVA complements them and creates more opportunities for users like you.
What FIVA Offers You
With FIVA, you unlock three main use cases:
-
Fixed Yield
-
Yield & Rewards Farming with up to x20 Leverage
-
Providing Liquidity Without Impermanent Loss
These features enable you to adopt more advanced yield strategies and better manage risk. For example, if you’re concerned that a protocol’s yield might drop, you can lock in your current yield to protect yourself from this risk (similar to shorting the yield). In simple terms, if you think the yield will decrease, you can secure the current yield, avoiding potential losses.
Also, if you believe in a protocol and want to maximize your earnings, FIVA allows you to use leverage to increase your yield without needing to invest a large amount of capital. Instead of staking the full amount, you can buy just the yield generated by the protocol. For example, if staking 1000 TON in a protocol would generate 40 TON as yield in one year at 4% APY, FIVA lets you buy that yield for much less — say, 35 TON. This gives you 28x leverage because you’re paying 35 TON to earn the yield that 1000 TON would generate (1000 / 35 = 28x).
The price of yield fluctuates based on market expectations about the protocol’s future APY. If people expect the APY to drop to 3.5%, the yield may be sold for less, increasing your leverage, while higher expected APYs (e.g., 4.5%) would raise the cost, lowering your leverage to around 22x. Leverage can boost your earnings, but it’s risky — if the FIVA APY increases by 1%, you could earn around 28% profit (45 / 35 - 1 = 28%), but if the yield decreases, you could lose 28%. It’s a high-risk, high-reward strategy, so it’s important to plan your approach carefully. FIVA’s yield tokenization makes this efficient, allowing you to maximize your yield without locking up too much capital.
For liquidity providers, we’ve designed a unique Automatic Market Maker (AMM) that solves the risk of impermanent loss, giving you more ways to make your tokens work for you instead of just letting them sit idle in your wallet. More details on these strategies will be covered in upcoming articles.
How Does FIVA Work?
You might ask: If a DeFi protocol generates yield, why can’t you fully control or trade that yield directly?
It’s clear that yield is one of the most important elements in DeFi, yet when you invest in a protocol, you’re often tied to the performance of the entire asset, not just the yield itself. So, how can we solve this problem?
Imagine this: To truly manage or trade yield, you first need to separate it from the asset that generates it. You can’t really manage something if it’s still tied to the original asset, right? If the yield is locked together with the asset, it limits what you can do with it.
So, what’s the logical next step? Extracting the yield from the protocol. By doing this, we create something that represents only the yield — which you actually want to manage. It’s like unlocking a separate layer of control. And once you’ve separated the yield from the original asset, suddenly you have new opportunities. Now, you can manage the yield, trade it, or even speculate on it — independently of the asset itself.
Since we have extracted the yield from the protocol, it would make sense to create two tokens. One to represent the yield and the other to represent the principal, that is, the actual crypto asset. This way, you have two clear components that can be managed separately.
This is exactly what we do at FIVA. We take existing DeFi protocols, pull apart their tokens, and create two new tokens:
• The Yield Token (YT) – representing the yield generated by the protocol.
• The Principal Token (PT) – representing the actual asset that produces the yield.
With this split, you now have the power to trade, manage, and invest in yield separately from the principal, giving you more control and more flexibility. It’s intuitive, it’s simple, and it opens up entirely new strategies for managing your assets.
The rule here is simple:
Yield Part (YT) + Principal Part (PT) = Underlying Asset (a token of protocol that generates yield, for example, tsTON at Tonstakers).
Once we’ve split the yield from the principal, we create a market using our custom-built AMM where users can trade these tokens, speculate on yield, and manage their positions. But in order to trade, you need to know the price of the token. Let’s be real — you can’t predict how much yield a protocol will generate over the next 10 years, so pricing the yield token might seem impossible.
That’s where maturity comes in. Maturity refers to the timeframe over which the yield token will generate yield. After that, the yield token stops earning yield. By introducing maturity, we allow the market to estimate the price of yield tokens and start trading them. Because YT + PT = Underlying Asset, knowing the price of the yield token and the underlying asset lets you determine the value of the principal token as well.
This creates a yield market, a brand-new concept for the TON ecosystem, allowing users to trade and manage yield while adding new utility to the ecosystem.
For a detailed walkthrough of how FIVA's PT and YT tokens work in practice, explore our in-depth guide.
Wrapping It Up
As stated earlier, FIVA is here to solve two big challenges in DeFi: unpredictable yields and the issue of limited capital for farming rewards. Our solutions are designed to give you more control over your investments by offering fixed yield options, the ability to farm yields with leverage, and a way to provide liquidity without worrying about impermanent loss.
At the heart of FIVA is a simple idea: we split yield-bearing assets into two parts — Yield Tokens (YT) and Principal Tokens (PT). This split allows you to manage and trade the yield (the income you make from the investment) separately from the main asset, giving you more flexibility and options.
We also introduced the idea of maturity — that is, a set period during which yield tokens generate income. After this period, the yield token stops earning, and the principal token equals the value of the underlying asset. This makes it easier for you to predict and manage your yield, giving you better control over your investment.
In short, FIVA isn’t just another DeFi platform — it’s a tool that helps you make the most of your investments. Whether you’re looking to lock in a fixed yield, use leverage to earn more with less, or provide liquidity without worrying about losing value, FIVA opens up new possibilities.
Ready to dive deeper?
We'll be releasing detailed articles about every aspect of FIVA protocol – from yield tokenization mechanics to advanced trading strategies.
Stay ahead of the curve and follow us:
Let's reshape DeFi on TON together! 🚀