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.

• 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

Scenarios	Alice	Bob
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%

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

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.