PT and YT — Tokenized Yield
What Is Tokenized Yield in Napier?
Napier splits a yield-bearing asset into PT (principal) and YT (yield). PT/YT trade in Napier Markets, enabling fixed- and floating-yield strategies—for example: ETH → stETH → PT-wstETH + YT-wstETH. The design is analogous to bond stripping in traditional finance.
This mechanism allows anyone to compose flexible, modular yield products.
Core Concepts
PT (Principal Token): The principal claim that redeems 1:1 for the underlying asset at maturity. Because yield is stripped out, PT is typically issued at a discount and converges to par as maturity approaches.
YT (Yield Token): The right to the underlying asset’s accrued yield (and program incentives/points, if any) during the accrual period.
LPT (LP Token): The receipt token obtained when providing liquidity (e.g., base–PT or base–YT) to Napier Markets.
Key Features
No-Code / Low-Code: By customizing Resolver templates, curators can onboard nearly any yield-bearing asset without writing new smart contracts.
Market-Based Economics: Each market defines its own fee schedule (issuance, redemption, performance) and revenue routing at deployment.
Market-Based Governance: Markets function as isolated administrative domains with per-market roles; core parameters are fixed at creation and remain immutable.
Selective Controls: Role- and policy-based controls—including gating and an emergency pause—can be configured per market.
Permissionless Creation: Any party may deploy new PT/YT; no additional approvals are required.
Transparent Rules: Maturity and redemption terms, oracle sources, fee schedules, incentive programs, and role assignments are published on-chain and fully auditable.
Permissionless Creation
A defining characteristic of Napier is permissionless PT/YT market creation. Any curator can deploy an isolated market specified by a fixed set of parameters.
This departs from common designs that:
require governance or core-team approval for listings and parameter changes; and
manage markets by a single entity or DAO, thereby sharing risk across the protocol.
In Napier, parameters are selected by each market’s curator at the time of creation. The curator selectively exercises full administrative control and is entitled to the economic returns associated with the growth of their market.
Fees (Economics)
Curators set market fees and parameters for PT and YT to reflect demand, volatility, and maturity.
Issuance fee: A fixed-percentage fee applied to the underlying when minting new PT and YT.
Redemption fee: A fixed-percentage fee applied when converting PT (and any associated YT, if applicable) back to the underlying.
Performance fee (before maturity): A dynamic percentage applied to all yield accrued (including points) by all outstanding YT. Example: 10% on 3% APY ≈ 0.3% of notional.
Performance fee (after maturity): A dynamic percentage applied to yield generated by the YBTs backing matured, unredeemed PTs.
Example: 10% on 3% APY ≈ 0.3% of notional.
Roles (Governance)
Similar to PTs and YTs, roles may be delegated on a per-market basis. Curators assign roles to one or more parties.
Role Types
Curator: Market owner responsible for assigning and removing roles.
LP: Provides liquidity and receives fee allocations in proportion to share.
Fee Receiver: An individual or project designated by the curator to collect curation fees.
Protocol Pauser: An account authorized by the curator to pause a specific PT in emergencies.
Developer: A role authorized to implement additional custom logic for PTs/YTs.
Governance Principle
Neither Napier Labs nor the Napier DAO holds privileged control over individual PT/YT markets. Role assignment is exclusively managed by curators.
Market Categories
Permissions evolve with DeFi and may be selectively retained to meet user demand.
Categories
Verified: Markets created by curators who complete the verification process. Displayed with a Verified badge on the Napier interface by default.
Unverified: Markets without verification. Displayed with an Unverified badge.
Unstoppable: Markets where curators renounce all permissions except Fee Receiver, rendering the market immutable. Displayed with an Unstoppable badge.
Banned: Markets deemed socially or morally inappropriate, or created with malicious intent. Displayed with a Banned badge.
Core Interactions
Mint and Redeem: Mint PT and YT; redeem PT 1:1 at maturity.
Buy and Sell: Buy and sell PT/YT via Napier Markets.
Claim YT: Claim accrued yield and rewards (including points) at anytime
Provide Liquidity: Add or remove liquidity to earn fees, incentives rehypothecation.
Use PT across DeFi: Use PT as collateral within external protocols.
Claim Curation Revenue: Curators claim configured fees and incentives at anytime
Curate and Manage: Create markets, configure fees/oracles, and manage roles and emergency actions.
Get Involved
Napier Markets are open and composable by design. Choose your path and dive deeper with the dedicated guides:
For Users → User Guide: Learn how to trade PT/YT, provide liquidity, and use PT as collateral.
For Curators → Curator Guide: Understand how to launch markets, configure parameters, and build your own onchain yield products.
For Builders → Developer Guide: Integrate Napier Markets into your protocol with SDKs and APIs.
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