In traditional DeFi, you Stake ETH to earn yield. Capital and Yield are tied together. Yield Stripping allows you to split that asset into 2 separate tradable parts:
Principal Token(PT) represents the principal. You buy it at a discount and wait for maturity to redeem 100% principal. š This is Fixed Yield.
Yield Token(YT) represents the future yield stream. You pay a small amount to buy the right to receive all future interest. š This is Long Yield.
šø Whale Strategy:
If you think ETH Staking rates will drop š Sell YT, buy PT to lock in a safe fixed rate.
If you think rates will skyrocket š Buy YT. With small capital, you can earn the yield of 100 ETH by paying only 5 ETH for the YT.
š¹ Yield Stripping turns Interest Rates into a Tradable Asset. It is the most complex but highest reward tool for those who understand Interest Rate Derivatives.
Do you want guaranteed safety or do you want to bet on a yield rain with the risk of losing the premium paid?
News is for reference, not investment advice. Please read carefully before making a decision.
