PT
Principal Token (PT) represents the principal portion of an underlying yield-bearing asset.
PT entitles you to the principal of the underlying yield-bearing token, redeemable after maturity. If you own 1 PT-stETH with 1 year maturity, you will be able to redeem 1 ETH worth of stETH after 1 year. PT is tradeable anytime, even before maturity.
PT ~ Principal Tokens
Principal Token (PT) represents the principal portion of an underlying yield-bearing asset. Upon maturity, PT can be redeemed at 1:1 for the accounting asset. This is the base, principal asset deployed in the underlying protocol such as Lido, Renzo, and Aave (e.g. ETH in stETH, ETH in ezETH, USDC in aUSDC).
Since the collective value of its yield component has been separated, PT can be acquired at a discount relative to its accounting asset. Assuming no swaps, the value of PT will approach and ultimately match the value of accounting asset on maturity when redemption is enabled.
This appreciation in value is what establishes its Fixed Yield APY.
Redemption Value
In general, yield bearing assets can be broadly categorized as:
Rebasing assets - tokens that increase in count/number overtime as yield is accrued
Examples: stETH, aUSDC 2. Reward-bearing assets - tokens that increase in value overtime as yield is accrued
Examples: ezETH, wstETH
In the case of reward-bearing assets, it’s particularly important to note that PT is redeemable 1:1 for the accounting asset, NOT the **underlying asset.
For example, the value of Renzo ezETH increases overtime relative to ETH as staking and restaking rewards are accrued. For every 1 PT-ezETH you own, you’ll be able to redeem 1 ETH worth of ezETH upon maturity, NOT 1 ezETH which has a higher value.
You can double-check the redemption value of PT on Splice's individual asset pages.
How to Redeem PT
To redeem your PT on maturity:
Visit Splice Dashboard and toggle to the “Inactive” markets page
Select a market
Select an output asset. Splice will automatically perform Redemption > Swap (if needed) for you
Fixed Yield
A fixed yield can be achieved by forgoing points and instead buying and holding Principal Tokens (PT) until maturity. PT represents the principal portion of an underlying yield-bearing asset. Upon maturity, PT can be redeemed at 1:1 for the underlying asset (e.g. 1 PT-WETH is redeemed for 1 WETH).
Since the collective value of its yield component has been separated, PT can be acquired at a discount compared to the underlying asset. Assuming no swaps, the value of PT will approach and ultimately match the value of underlying asset on maturity when redemption is enabled.
The known final value of PT (relative to the underlying asset) is what establishes its Fixed Yield APY.
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