Yield Tokenization
1. Minting
Yield-bearing assets such as stAtom are split into YT (yield token) and PT (principal token) for a given duration.
For example, stATOM is split into YT and PT for 30 days; the yield earned over those 30 days accrues to the YT holder, and the original principal to the PT holder at the end of the 30 day period.
The converse process of ‘un-minting’ takes PT and YT of the same duration and re-assembled them into stAtom.
2. Settlement
Stride LSDs are auto-compounding, meaning the yield is reinvested rather than paid out. As a result, the price of the stAsset is always increasing against the Asset itself.
The change in the redemption price of the stAsset over the period represents the amount of yield accrued per token over the period.
For example, at the time of buying 1 YT, exchange rate was 1 stATOM per ATOM, after 90 days it is 0.99 stATOM per ATOM:
YT holder will get 0.01 stATOM after 90 days
PT holder will get 0.99 stATOM after 90 days If the YT holder sells before 90 days, say at 45 days, yield is computed on the same basis at 45 days instead, and paid to the YT holder.
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