LogoLogo
Swivel v4.0.0
Swivel v4.0.0
  • Litepaper
    • Principal Tokens (PTs)
      • Exiting/Selling PTs
      • Secondary AMM's
    • Yield Tokens (YTs)
      • Exiting/Selling YTs
    • AMM vs. Orderbook
  • Swivel Safety Module (SSM)
    • Staking
    • Withdrawing
  • Swivel Exchange
    • Exchange Functions
      • Simple Fixed Yield Lending
      • Professional Fixed-Yield Lending
      • Purchasing YTs
      • Selling PTs
      • Selling YTs
      • Splitting/Combining Tokens
      • Redeeming Tokens/Interest
    • Maturity
    • Liquidity Incentives
    • Minimums, Rate Limits & Fees
    • Retroactive Distribution
    • How to Claim SWIV Tokens
  • Developers
    • Exchange API
      • GET
        • Get Markets
        • Orderbook
        • Get Order
        • OHCLV (Candles)
        • Get Effective Price (Preview Market Order)
        • Get Order History
        • Get Last Trade Info
      • POST
        • Order
    • Swivel.js
      • API
        • Swivel
        • MarketPlace
        • VaultTracker
    • Swivel.py
      • swivel
        • swivel.abstracts
          • swivel.abstracts.deployed
          • swivel.abstracts.market_place
          • swivel.abstracts.swivel
          • swivel.abstracts.vault_tracker
        • swivel.contracts
          • swivel.contracts.market_place
          • swivel.contracts.swivel
          • swivel.contracts.vault_tracker
        • swivel.vendors
          • swivel.vendors.signer
          • swivel.vendors.w3
    • Scrivel (Python Examples)
    • Contracts Overview
      • Contracts
        • Swivel
        • MarketPlace
        • VaultTracker
        • Creator
    • Ubiquitous Language V4
      • Shared Language
      • UI Language
      • Technical Language
      • Compound Language
      • Finance Terms
  • Community & Media
  • Incentives
  • Other Resources
    • Institutions
      • Rate Profile Optimization
        • Instruments and Participants
        • Market Opportunities and Pricing
        • Counterparty Risk Management
        • Benefits and drawbacks of standardization
        • User Needs
          • Corporate Treasury and Funding
          • Institutional Investors and Asset Managers
          • Speculators and Proprietary Trading Functions
          • Brokers and Market Makers
          • Liquidity Management, Funding and Resource Management
          • Risk Management and Insurance
          • Smaller Institutions and Individuals
      • Swivel for Enterprise
        • Overview
        • How Swivel works
        • Flexible Order Book
        • Future Developments
      • Delegated Credit
        • Challenges of Delegated Credit
          • Credit Pools
          • Intermediating Trust in Credit Delegation
Powered by GitBook
On this page
  • Overview
  • Pricing
  1. Litepaper

Principal Tokens (PTs)

ERC-20 Tokens that represent a 1-1 claim for underlying upon maturity.

PreviousLitepaperNextExiting/Selling PTs

Last updated 1 year ago

Overview

Principal tokens, PTs, are ERC-20's which are redeemable 1:1 at maturity for an underlying token.

As users lock-in fixed yields, their deposit is split into PTs and YTs (yield tokens) and the the YTs minted are sold to fuel a fixed-yield.

This leaves the lender with an immediate fixed-yield and their minted PTs.

Fixed-Yield Lending:

Alice has 1000 USDC. Alice fills Bob's order, splitting 1000 USDC into 1000 ptUSDC and 1000 ytUSDC. Alice sells 1000 ytUSDC to Bob for 50 USDC. Alice then has 1000 ptUSDC. At maturity Alice redeems her 1000 ptUSDC for 1000 USDC. This leaves Alice with 1050 USDC.

Pricing

Given PTs represent a 1-1 redemption only upon maturity, they are discounted at a rate based on the predicted amount of interest that may have otherwise been generated until the maturity/redemption date (the YT price).

Accepting that this potential yield decreases as time passes, PTs appreciate towards par and reach par as maturity is reached.

Further, because a YT represents the predicted future yield, the discount on a PT is inversely proportional to the cost of an YT.

At maturity, PTs begin to appreciate above par, accruing the yield generated on a given money-market (e.g. Compound) until redeemed.

Lending 1000 USDC at 5% for 1 Year