Yield Tokens (YTs)
Yield Tokens contained in Swivel's Vaults which represent the claim to underlying yields.
When a user buys YTs, they create a vault that tracks their balances within a given market.
Each vault contains two balances, Notional and Redeemable.
Notional Tokens (YTs) represent a 1-1 deposit, currently generating interest in an underlying protocol. Once maturity has been reached, interest-generation ceases and YTs become worthless.
As such, YTs are deprecating assets that experience time-decay. As time passes, YTs decrease in value, and as they approach maturity, an their value approaches 0.
The Redeemable represents the amount of accrued interest currently available to redeem.
As users interact with their vault, interest is accumulated to the redeemable balance, and this balance can be redeemed at any time.
Bob has 50 USDC. Bob fills Alice's order selling 1000 ytUSDC at .05/ea (5%), paying Alice an immediate $50 premium. Once filled, Alice mints 1000 ptUSDC and 1000 ytUSDC, transferring 1000 ytUSDC to Bob. Bob then owns 1000 ytUSDC (the right to the yield generated by 1000 USDC).
Given YTs represent a 1-1 deposit into an underlying money-market, and the claim to the deposit's future yield, they are priced based on the expected yield generated until maturity.
This potential future yield decreases as time passes and as such, YTs depreciate and experience theta-decay.
Of note, because a PT represents an underlying token stripped of YT yields, the cost of a YT is inversely proportional to the discount on a PT.