What are PT and YT?
The two tokens at the heart of Yield Forge — and why they exist.
When you deposit liquidity into Yield Forge, you don't just get a receipt token. You get two tokens:
- PT (Principal Token) — your capital
- YT (Yield Token) — your future yield
This separation is the whole point of the protocol. It lets you trade principal and yield independently.
Principal Token (PT)
PT represents your claim on the underlying liquidity at maturity.
- Redeemable after maturity for the full value of the original LP position (both tokens in the pair)
- Trades at a discount before maturity — because PT holders don't receive yield
- Price converges to maturity target V(t) (LP position value per PT) as maturity approaches
Buying PT = locking in a fixed return. You pay less than face value today, and redeem at full value later. The discount is your profit.
!TIP Think of PT like a zero-coupon bond. You buy it cheap, wait, and redeem at face value.
Yield Token (YT)
YT gives you the right to collect all yield (swap fees) generated by the underlying position until maturity.
- 1 YT = yield from 1 unit of underlying liquidity
- No principal value at maturity — its value comes only from the fees it collects
- Price decreases over time as there's less remaining yield to capture
Buying YT = betting on yield. If the pool generates more fees than what you paid for the YT, you profit.
!TIP YT is like a leveraged yield play. You get exposure to the full position's fees while only paying a fraction of the capital.
How They Work Together
When you deposit $10,000 of liquidity, you receive 10,000 PT and 10,000 YT.
| What you do | Result |
|---|---|
| Hold both | Same as regular LP — earn fees and redeem principal |
| Sell PT, keep YT | You get cash now + keep earning yield (leveraged) |
| Sell YT, keep PT | You lock in a fixed return (gave up variable yield) |
| Sell both | Full exit with immediate liquidity |
Token Lifecycle
Each PT and YT pair is tied to a specific maturity date (currently 90-day cycles).
Before maturity:
- PT trades on the secondary market (AMM)
- YT trades on the orderbook
- YT accumulates yield continuously
After maturity:
- PT can be redeemed for the underlying assets
- YT stops earning new yield — but you can still claim anything uncollected