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Yield Tokenization


Yield tokenization refers to taking a yield-bearing asset (e.g. Yearn USDC vault) and splitting the yield stream out to another token. In the context of Timeless, this means splitting into Perpetual Yield Token (PYT), whose holders receive the yield generated by the user deposits, and Negative Yield Token (NYT).

Users deposit assets into Timeless to mint PYT & NYT, and burn PYT & NYT together to get back the assets. Each yield source (e.g. Yearn USDC vault) corresponds to a pair of PYT and NYT, so users can specify which yield source they want to use.


Let's say you have 100 USDC and you want to use it to mint PYT using the Yearn USDC vault as the yield source.

You would give your 100 USDC to Timeless, and Timeless will deposit it into the Yearn USDC vault and mint you 100 PYT and 100 NYT.

You can now use the PYT & NYT however you want, be it transferring to another wallet you own or depositing into another DeFi protocol.

The wallet that owns the 100 PYT will be able to claim the yield generated by your 100 USDC whenever they want.

If you wanted to get back your 100 USDC, you can do so by simply returning 100 PYT and 100 NYT to Timeless.


Yield tokenization is useful because it enables new financial instruments whose prices are correlated to the yield rate in different ways. This unlocks an entirely new market for yield boosting, yield hedging, and yield speculation that was simply not feasible without yield tokenization.

Furthermore, yield tokenization is another instance of the "tokenize everything" movement seen in crypto and decentralized finance. Tokenization is good for the same reason why the Web is good: it promotes a common standard and enable protocols and products to effortlessly work together like Lego pieces. This means whenever someone innovates, everyone else benefits as well since their product is now slightly more useful.

Timeless is dedicated to permissionless innovation and adopting common standards, so that it can remain a piece of vital infrastructure in perpetuity.