At FIVA, we’re introducing a concept called yield stripping, designed to offer more sophisticated asset and yield management tools for DeFi users.

If you’re unfamiliar with our protocol, we recommend starting with a basic explanation of what FIVA is and how PT and YT tokens work. You can also check out our article on liquidity pools for more context. In this article, we dive deeper into the technical workings of SY, PT, and YT tokens, and explain how yield stripping powers our platform.

The Process of Yield Stripping

The process starts by wrapping yield-bearing assets into SY (Standardized Yield) tokens. This standardization unifies the way these assets behave within our protocol. You may encounter terms like tsTON or SY-tsTON — but don't worry. These tokens have the same value, and you can wrap or unwrap them without restrictions. Think of SY tokens as the FIVA-ready version of your yield-bearing assets.

Once the asset is wrapped, the magic begins. We split the SY token into two components:

• PT (Principal Token): Represents the principal part of your asset.

• YT (Yield Token): Represents the yield generated by the asset.

This process is called yield stripping — it separates the principal from the yield, giving you more control and flexibility over your assets. Both PT and YT tokens can be minted and redeemed as needed, ensuring full control of your strategy.

For example, splitting SY-tsTON results in:

• PT-tsTON: Representing the staked TON value.

• YT-tsTON: Representing the yield generated by that staked TON.

With these two tokens, you have the freedom to manage the principal and yield independently.

Why Is Maturity Important?

Maturity plays a crucial role in yield stripping. Every time you split an SY token into PT and YT, it comes with a specific maturity date. Here’s why it matters:

• PT tokens can be fully redeemed for the principal value of the underlying asset at maturity.

• YT tokens stop generating yield, and their value drops to zero.

Maturity provides the market with a clear timeframe for pricing YT tokens. Without a maturity date, it would be difficult to determine the YT token's value, as yield could fluctuate indefinitely. By introducing maturity, we ensure predictable timelines for managing yield strategies and making informed decisions.

For example, if you split SY-tsTON into PT-tsTON and YT-tsTON with a 3-month maturity, you know that the YT token will stop generating yield after three months, and the PT token will match the value of the underlying asset (TON) at that time.

What Can You Do Before and After Maturity?

Understanding your options before and after maturity helps you optimize your yield strategy with FIVA.

Before Maturity:

1. Mint PT and YT from SY tokens – Convert your SY tokens into PT and YT to separate the principal and yield.

2. Redeem SY by combining PT and YT – If needed, you can recombine equal amounts of PT and YT to get your original SY token back.

3. Trade PT and YT in the AMM – Use FIVA’s AMM to trade PT and YT tokens, speculate on yield, or hedge against risks.

After Maturity:

1. No more minting – You can no longer mint new PT or YT tokens after the maturity date.

2. Redeem SY using only PT – After maturity, SY can be redeemed with just PT, as YT loses its value.

3. YT value drops to zero – At maturity, YT tokens stop generating yield, making their value zero.

This setup ensures that you can manage your yield efficiently and that the market can price YT tokens accurately leading up to maturity.

How Yield Stripping Powers Multiple Pools

Each yield-bearing asset can have multiple pools with different maturity dates. For example, a single asset may have three distinct pools, each offering SY, PT, and YT tokens with their own maturities and AMMs.

This flexibility allows you to customize your strategy and choose a maturity timeline that aligns with your financial goals.

Bringing Crypto-Native Derivatives to TON

What does this mean for you? With yield stripping, FIVA introduces crypto-native yield derivatives to the TON ecosystem. These derivatives give you new ways to manage, trade, and speculate on yield — all done on-chain, ensuring transparency, security, and decentralization.

For example, by splitting a yield-bearing token like stTON from Bemo, you can:

• Lock in a fixed yield by holding PT tokens.

• Increase exposure to yield by trading YT tokens.

• Provide liquidity without impermanent loss using FIVA’s custom AMM.

This system gives you better control, greater flexibility, and new strategies for managing your investments.

Wrapping It Up

FIVA’s yield stripping technology empowers you by separating yield from the principal. This approach allows you to trade, manage, and maximize your yield in ways that were not previously possible, creating opportunities for both yield farmers and liquidity providers.

Whether you want to secure a fixed yield, leverage yield positions, or provide liquidity with minimal risk, FIVA helps you achieve your financial goals in DeFi.

In future articles, we’ll explore even more strategies you can use with FIVA. Whether you’re new to DeFi or an experienced investor, our tools will help you become more capital-efficient and strategic with your investments. Stay tuned for more!

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