Secondary Market
The built-in AMM for trading PT before maturity.
Yield Forge has a built-in AMM (Automated Market Maker) for trading Principal Tokens. This is the secondary market — where you buy or sell PT without minting or redeeming through the protocol directly.
Why Use It?
- Exit early — sell PT for quote tokens without waiting for maturity
- Lock in yield — buy PT at a discount to guarantee a fixed return
- Price discovery — the market price of PT reflects the implied interest rate
How the AMM Works
The market uses a constant product formula () with a twist: only one side is real.
- x = actual PT reserves in the pool
- y = virtual quote reserves (calculated from the current price, not real tokens)
This means LPs only need to deposit PT — no quote tokens required. The protocol calculates the virtual quote side automatically.
Key Properties
| Feature | Detail |
|---|---|
| Liquidity type | Single-sided (PT only) |
| First LP | Sets the initial PT price (discount) |
| Swap fees | 0.10% — 0.50%, scales with time to maturity |
| Fee split | 80% to LPs, 20% to protocol |
Providing Liquidity
You can earn additional yield by becoming an LP on the secondary market:
- Deposit PT into the market
- Earn a share of trading fees from every swap
- Withdraw when you want (you get PT back)
Risk: Impermanent loss relative to just holding PT. In practice, this is mild because PT and the underlying are highly correlated.
Market Lifecycle
Each cycle has its own market that follows these stages:
- Pending — cycle is created, no liquidity yet
- Active — first LP deposits PT and sets the starting price, trading begins
- Expired — maturity reached, trading stops, PT becomes redeemable
!NOTE The implied APY displayed on the market page is derived directly from the PT price. When PT trades at a larger discount, the implied APY is higher.