Pendle - YT
All about YT assets, their integration with Dolomite, and what makes them special for Pendle users.
Last updated
All about YT assets, their integration with Dolomite, and what makes them special for Pendle users.
Last updated
Yield Tokens (YT), represent only the yield of a yield-bearing asset. By holding YT, a user receives the real yield from the underlying asset, up until maturity. Naturally, the asset trends to $0 as there is less remaining yield over time before the asset reaches maturity, meaning upon maturity YT assets are worth $0.
On a Pendle market for a yield-bearing asset, the PT and YT forms of the yield-bearing asset share a relationship with the Implied APY.
Underlying APY: The current yield produced by the underlying asset.
Implied APY: The rate that the yield-bearing asset is priced at by the market (in terms of yield), and also representing the PT asset's fixed APY. At the time of purchasing a YT asset, the price of the YT asset is priced at the Implied APY.
When purchasing YT tokens, 1 YT token represent the yield from 1 of the underlying asset. For example, buying 10 YT-stETH and holding them for 5 days lets you receive all of the yield equivalent to a 10 ETH deposit on Lido within the same period of time. You would profit in this example if the future yield ends up being greater than the Implied Yield you purchased the YT-stETH at, and would be at a loss if the inverse is true.
While it might seem illogical for the Implied APY to be greater than the Underlying APY, it is important to remember the spread between them it completely dictated by the market. Users could potentially factor in speculation about the asset's future price or yield, or maybe potential abstracted yield of an underlying asset when purchasing YT tokens (i.e. the underlying assets point system or additional yield such as oARB). These concepts often lead to a discrepancy between the Underlying APY of the asset versus the Implied APY, as speculation and market demand are factored in.
See the Pendle docs for more information on YT assets:
Dolomite empowers users to retain their DeFi-native rights while their assets are deposited on Dolomite. Meaning, you can continue to earn and claim the YT asset's interest while leveraging it, hedging it, or borrowing against it. Ultimately, enabling your YT asset as collateral on Dolomite opens the doors for many lucrative strategies to be ran.
YT assets can be acquired by minting or swapping to it on Pendle's Market page on their web application, or by using Zap on Dolomite.
To acquire a YT asset, you must first have a valid token that can be zapped into the YT asset in your wallet, or you can mint it by depositing the correlated yield-bearing token, which will produce PT and YT version of it.
Another method to obtain an integrated YT asset on Dolomite is by using the Zap feature. You are able to Zap to and from a YT asset both from your Balance and within Borrow Positions. See more on using Zap here.
Once you have YT asset in your wallet, you may deposit it onto Dolomite via the Balances page (however if you've used Zap to get your YT asset, you'll already have the YT asset in your Dolomite Balance and can skip this step). To deposit it, locate the plus icon (i.e ⊕), to the right of your YT asset the In Wallet column (shown below).
Note: if it is your first time depositing, you will have to unlock the YT asset first, then perform the deposit. Once your YT asset is deposited, you will be able to use it across Dolomite's various services.
Each YT asset inherently comes with associated risk from its yield-bearing base asset, and the Pendle market.
For Dolomite, you can learn more about the risk parameters for YT assets by visiting the Risk Mitigation page.
To process these expirations, Dolomite uses a special Expiry smart contract that resembles a liquidation. You can learn more about the process here.
There are no additional fees for using your YT assets on Dolomite.
