Yield Tokenization

Splitting yield bearing assets into fixed returns, leveraged yield and airdrops

Decentralized Finance (DeFi) is built on layers of protocols that enhance each other's capabilities.

Napier’s modular yield tokenization significantly expands the financial layer for fintech companies, hedge funds, and DeFi projects, allowing them to freely build yield derivative products. Under their own ownership, they can customize and issue principal tokens (PTs) and yield tokens (YT) as needed.

Yield Tokenization

Yield Tokenization enables users to maximize your yield depending on the market situation. Users receive yield-bearing assets when they deposit funds into a yield-source. For example, DAI staked in Compound is represented as cDAI. ETH staked in Lido is represented as stETH.

cDAI and stETH are examples of Yield-bearing assets.

In Napier, yield-bearing assets are split into two components: Principal Tokens (PT) and Yield Tokens (YT). PT represents the principal of the underlying yield-bearing token, while YT represents entitlement to all the yield of the asset. YT and PT can be traded on Napier Pool.

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What Napier does is similar to bond stripping in traditional finance, where the principal and interest of bonds are separated. In this, PTs are equivalent to zero-coupon bonds, while YTs are the detached coupon payments.

Users can mint PT and YT by depositing the yield-bearing asset (e.g. stETH) into Napier. Base assets (e.g.ETH) will be auto-converted into the yield-bearing asset before PT and YT are minted.

e.g. ETH → stETH → PT-stETH + YT-stETH

The modular yield tokenization

The Napier v2 is a modular yield tokenization protocol that enables you to own, manage, create any yield products without permissions. It can be broken down into three perspectives:

• Napier Factory: Napier Factory provides a seamless experience, enabling anyone to create PTs and YTs and deploy the necessary tech stack for integration within DeFi ecosystem.

• Market-Based Economics: The economics of PT and YT assets can be freely defined. This economic flexibility creates opportunities for individuals and projects leveraging Napier stack to develop their own profitable products.

• Market-Based Governance: The various permissions related to PT and YT, segmented by market, can be flexibly assigned to one or more individuals or entities. This governance flexibility allows anyone building with Napier stack to make faster and more objective decisions.

These three features are designed to empower you—PT and YT as a Service.