When I woke up, the sky was trampled. Powell's few words were trampled on one another. Even stablecoins such as USDC were on the list of price increases.

Today we will talk about two core concepts in USUALx: YT and PT. If you are interested in staking or DeFi, this article will definitely help you get started quickly. [Follow me and get bonus for other articles on the homepage]

What are YT and PT?

In simple terms, YT (Yield Token) and PT (Principal Token) are innovative designs that split pledged assets into two parts. The benefit of this is that your assets are more flexible, allowing you to hold the principal steadily while allowing the yield part to make more money.

Let's take a detailed look at their differences:

PT (Principal Token)

The full name of PT is Principal Token, meaning your 'principal portion'.

  • Its core function: represents your staked principal, simply put, it means your money stays intact.

  • Who is it suitable for: conservative investors, such as those who don't want to take too much risk but still wish to participate in staking.

  • How to use: You can hold PT without doing anything or use it as collateral for lending, such as exchanging for more liquidity on a DeFi platform.

YT (Yield Token)

The full name of YT is Yield Token, which translates to 'earnings portion'.

  • Its core function: represents future earnings, such as interest, reward tokens, etc.

  • Who is it suitable for: users willing to take some risks and looking to seize additional earning opportunities.

  • How to use: You can sell YT, cash out early, or continue to hold it to earn more in the future.

For example

Assuming you staked 1,000 USUAL, the system will split it into:

  • 1,000 PT (your principal portion, stable in the long term).

  • YT (future earnings for the next 12 months, e.g., 100 USUAL).

Now, you have two choices:

  1. Conservative: You do nothing and just wait a year to get back 1,000 USUAL and 100 USUAL in earnings.

  2. Aggressive: You can sell YT directly and cash out a portion early, but the earnings might be a bit less.

Why design it this way?

The design of YT and PT makes staking more flexible:

  • For conservative users, you can hold the principal portion steadily without worrying about earnings fluctuations.

  • For aggressive users, you can use the earnings portion to exchange for more funds and increase your yield.

Future development potential

The split mechanism of USUALx not only makes staking more transparent and flexible but also adds more gameplay to the DeFi ecosystem. Whether you hold long-term or engage in short-term arbitrage, there is a strategy that suits you.

I hope this article helps clarify YT and PT for you. If you're interested in USUALx, why not give it a try? You might find unexpected surprises!