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Documentation Index

Fetch the complete documentation index at: https://v2-docs.exponent.finance/llms.txt

Use this file to discover all available pages before exploring further.

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SY: Standardized Yield

Different DeFi protocols each use different token standards and interest mechanics. Before yield stripping can occur, Exponent wraps yield assets from these protocols into a common interface called SY (Standardized Yield). Each supported protocol has a dedicated SY program that handles minting, redeeming, depositing, and withdrawing under a single unified interface. Exponent has a generic SY adapter that supports a variety of yield sources from protocols like Meteora, Fragmetric, Jupiter Lend, and more, as well as specific SY adapters for Kamino Lend, marginfi, Jito Restaking, and Perena. Because every SY program exposes the same interface, the vault’s stripping logic is completely protocol-agnostic — it doesn’t need to know which yield source it’s working with. Once wrapped as SY, tokens can be stripped into PT (Principal Token) and YT (Yield Token). The relationship value(1 PT) + value(1 YT) = value(1 SY) always holds — when it diverges on the market, arbitrage restores the balance.

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The Exchange Rate

SY has an exchange rate that represents how much underlying base asset one SY token is worth. It grows over time as the underlying protocol accrues yield, and drives all minting, redemption, and pricing across Exponent: 
base_amount = sy_amount × exchange_rate
For example, if the exchange rate is 1.05, then 100 SY tokens are worth 105 USDC. The rate starts at approximately 1.0 when a vault is created and increases as the underlying yield source earns interest:
TimeExchange Rate100 SY is worth
Day 01.00100 USDC
Day 901.025102.50 USDC
Day 1801.05105.00 USDC
Day 3651.10110.00 USDC
When you mint SY, you receive fewer SY tokens than the base you put in (because each SY is worth more than 1 base unit). When you redeem, the rate has grown further, so you get back more base than you originally deposited. To read the current exchange rate in code, use vault.currentSyExchangeRate — see Get Exchange Rate.

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How SY Conversion Works

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Depositing 1,000 USDC at a rate of 1.05 yields 952.38 SY. As yield accrues and the rate grows to 1.10, redeeming those same SY tokens returns 1,047.62 USDC — a profit driven entirely by the exchange rate appreciation.
Most users never interact with SY programs directly. The SDK’s ixStripFromBase and ixMergeToBase methods handle wrapping and unwrapping automatically as part of stripping and merging.
Strategy Vaults use the same protocol integrations (Kamino, Marginfi, Jito Restaking, Perena, Generic) through their InterfaceType enum. See Token Entry for the vault-side mapping.

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PT: Principal Token

PT (Principal Token) is the fixed-rate side of a stripped yield position. Think of it as a zero-coupon bond: you buy it at a discount and redeem it at face value when it matures. The discount you get is your fixed return — locked in at the moment you buy, regardless of what the underlying yield does afterward. When SY is stripped, it splits into PT (capturing the principal) and YT (capturing the variable yield). PT holders are completely insulated from yield fluctuations.

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Key Properties

  • Trades below face value before maturity
  • Redeemable 1:1 for the underlying at maturity
  • Price appreciates toward 1.00 as maturity approaches
  • Fixed yield — insulated from variable rate fluctuations

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How the Discount Works

PT always trades at a discount that reflects the market’s implied rate. The closer to maturity, the smaller the discount:
Days to MaturityPT PriceYou pay for 1,000 PTAt maturity you receive
1800.95950 SY1,000 SY
900.975975 SY1,000 SY
0 (maturity)1.00—1,000 SY
Buying 1,000 PT at 0.95 and holding to maturity nets you 50 SY profit — a fixed return locked in at purchase, no matter what happens to the underlying rate. For the exact pricing formulas (continuous compounding, implied APY, SY-denominated prices), see Pricing & Math.

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YT: Yield Token

YT (Yield Token) is the variable-yield side of a stripped position. When SY is stripped, it splits into PT (capturing the principal) and YT. YT represents all the rewards that do not accrue to the principal. Because YT only represents the yield component, it costs a fraction of the full asset — but earns the same yield. This makes YT a leveraged bet on the underlying rate: if yield is higher than the market expects, YT holders profit disproportionately. If yield disappoints, losses are amplified too.

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Key Properties

  • Leveraged yield exposure — amplified returns compared to holding SY directly
  • Value decreases over time — less time remaining means less yield left to capture
  • Yield accrues in real time — claimable as the exchange rate grows, not only at maturity
  • Expires worthless — after final yield collection at maturity, YT has no residual value

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How the Leverage Works

Suppose PT trades at 0.95. That means YT costs just 0.05 per unit — giving you 20x leverage on yield. Here’s what that looks like in practice:
If underlying earnsHolding 1,000 SYHolding YT (cost: 50 SY)
5% over 90 days50 SY profit~47.6 SY profit (95% return)
2% over 90 days20 SY profit~19 SY profit (38% return)
0%00 — lost 50 SY cost
YT also exhibits time decay: as maturity approaches, less time remains to earn yield, so YT price falls — even if the underlying rate hasn’t changed. This is the cost of leveraged exposure. For the exact pricing formulas (YT pricing, yield accrual, leverage multiplier, time decay), see Pricing & Math.
YT does not earn yield sitting in your wallet. You must deposit it into a YieldTokenPosition so the protocol can track accrual. See the SDK Quickstart for the full collection flow.

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Next Steps

Pricing & Math

Formulas for PT and YT pricing, implied APY, leverage, and time decay

Core SDK Quickstart

Start building with the Core SDK