# YT ## Definition **YT (Yield Token) -** YT represents the yield component of a yield bearing token. 1 YT gives the right to continually receiving the yield of 1 underlying asset UNTIL maturity. ## Pricing YT's price is also determined by market supply and demand. For example, * If 1 SUI = $1, the current underlying APY is 5%, maturity in 365 days. * Therefore, the fair price for 1 YT sSUI should be around $0.05, because currently, 1 YT sSUI can receive approximately $0.05 worth of yield from staked sSUI within one year. ## Long Yield / Leveraged Yield The yield of buying and holding YT is called **Long Yield**, since it essentially bets on the increase of the underlying yield, as known as YT APY. For example, Bob buys 100 YT sUSDC at a price of $0.05, totaling $5. Over a one-year maturity period, Bob continuously receives yields from 100 staked USDC, totaling $5.5. The actual APY from buying and holding YT for one year is ($5.5 - $5) / $5 = 10%, known as the YT APY. ## YT Trade Opportunity Because when APY rises, YT can help you increase your earnings even more, it's a good time to buy YT when you predict that the future underlying APY will be higher than it is now. ### YT trade in practice There's a pool on Nemo looks like this: * sUSDC, maturity 365 days * Underlying APY 5% - means that currently holding the underlying asset can yield an APY of 5%. Learn more [glossary](https://docs.nemoprotocol.com/general/glossary). * PT sUSDC = $0.96, Fixed APY = 4.17% * YT sUSDC = $0.04, Long yield APY = 25% Based on the above market information, 2 different traders have adopted varying trading strategies: * Alice buys 40 USDC, spending $40 * Bob buys 1000 YT sUSDC, spending $40
ScenariosAliceBob
If the average underlying APY remains at 5% within the 1-year maturity.

Net Profits: $2

APY: 5%

Net Profits: $10

APY: 25%

If the average of underlying APY increase to 6.5% in the next year

Net Profits: $2.6

APY: 6.5%

Net Profits: $25

APY: 62.5%

If the future APY drops to 3.5%.

Net Profits: $1.4

APY: 3.5%

Net Profits: $-5

APY: -12.5%

{% hint style="info" %} The calculation of YT's actual profits and APY goes: * Profits: *Total yield received - total cost of buying YT* * Actual YT APY: *(Total yield received - total cost of buying YT) / total cost of buying YT* {% endhint %} In the example above, we can see that the greater the profits, the greater the accompanying risks. Therefore, the key to YT trading depends on the future fluctuation of underlying APY.