When you lend your token, the amount you earn is rarely fixed. The yield earned varies with market conditions.

The same is true for when you stake your ATOM or INJ. And there isn’t much you can do about it.

That changes with Yield Trading. You are in control, able to hedge against yield / staking rates tapering off in bear markets and amplify your yield exposure during bull runs.

By ‘stripping’ yield and principal components of any yield-bearing assets such as stATOM into separate yield and principal tokens (YT and PT respectively), Temporal allows traders to take positions on changes in yield / interest rate with utmost simplicity.

Introduced for the first time to the $65B Cosmos ecosystem.

With Temporal, Yield Trading is taken up a notch. Users see:

  • No maturity restrictions – whether the asset is staked for 30 days or 300. Put the asset in and trade.

  • Supercharged earnings by trading yield on margin.

  • Capital Efficiency due to unified liquidity – a single pool for each asset, for all maturity levels.

Sample Strategies:

(detailed walkthroughs and numerical examples will be provided before TestNet. ETA: Q1 ‘24.)

  • Fixed rate – principal tokens act as a zero-coupon bond locking in the implied rate at time of purchase.

  • Variable rate – yield on assets such as stAtom fluctuates, yield tokens allow speculation on change in rates.

  • Long / short – traders can take long positions on one asset’s yield and simultaneously go short on another.

  • Leverage – traders can amplify returns by trading yield on margin.

  • Liquidity provision – transaction fees can be earned by providing liquidity to pools.

  • Real-world assets – On the Temporal roadmap to enable Yield Trading of RWAs like Currencies and Treasuries. So users can cheaply:

    • Hedge the price of a treasury bond through fixed-variable swaps

    • Bet on cross-currency swaps

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