Why Fixed Yield Matters in Crypto — and How to Earn It 🐷
In traditional finance, fixed income is standard. In crypto, it's a luxury. Most yields here are variable — they fluctuate wildly, sometimes doubling or halving within days. This volatility makes it challenging to plan or rely on consistent returns 😱
🤑 However, protocols like Pendle and Spectra have introduced fixed yield products, allowing users to lock in predictable returns on-chain. This innovation brings a level of stability previously uncommon in the crypto space.
Pendle and similar protocols enable users to split yield-bearing assets into two components:
🟢Principal Token (PT): Represents the principal amount of the asset. Holding PT until maturity allows you to redeem the full underlying asset, effectively locking in a fixed yield.
⏺Yield Token (YT): Represents the right to receive the yield generated by the asset until maturity. YT's value fluctuates based on market expectations of future yield.
This separation allows for more flexible and strategic investment approaches. For instance, if you anticipate a decrease in yield rates, holding PT can secure your returns because the yield is fixed.
Conversely, if you expect yields to rise, YT offers a way to capitalize on that increase. People often buy YTs not just to bet on high yields — but to leverage farm airdrop points 💸
