Yield Share Tokens

Farm enables anyone to maximize exposure to variable yields from Exponent markets by purchasing Yield Share Tokens (YTs).

Since Income Tokens give up any accruing variable yield from the DeFi products backing them, all this future variable yield becomes available in tokenized form (= Yield Share Tokens) for those looking to increase exposure to it.

This for instance enables smaller investors to gain leveraged exposure to these yields, as buying Yield Share Tokens (YTs) requires less capital than depositing the same amount directly into the underlying protocol.

Traders can also speculate on the future realized APY of DeFi markets through YT price fluctuations.

How Farming Yield Through YT Works

Farming yield through Yield Share Tokens (YTs) requires active management. This is because acquiring YTs requires to pay an “Implied APY”:

  • This represents the expected returns for the position.

  • If the realized APY at maturity is lower than the implied APY you bought, it means you will receive less yield than your initial investment.

The Implied APY does not follow exactly the underlying APY of a DeFi market. Instead, it moves through market forces:

  • The “implied APY” traded on the market is a forward projection of the future yield, and it will not necessarily match the historical performance of the underlying product.

  • If the implied APY on Exponent is lower than its underlying, traders who expect the underlying to remain stable can take advantage of this and collect more yield over time than what the market currently prices the future yield at.

1 Yield Share Token = 1 underlying asset (e.g. SOL, USDC, etc.) earning variable yield in the underlying position. This essentially gives you leveraged exposure to the variable yield, as it requires less capital to get exposure to the yield than depositing the same amount directly into the underlying yield source.
Ultimately, Yield Share Tokens (YTs) capture all the underlying yield accruing, including airdrops from converted points. If you believe that the current variable APY is undervalued and likely to realize a higher return at maturity, you can profit and earn more yield than your initial investment.

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Start Farming Variable Yields

1

Head to exponent.finance/farm

2

Select the market you wish to maximize exposure to

Look at the maturity and available liquidity.

3

Use Trader or Farmer mode

You can use simulated performance to quickly understand potential returns.

4

Input your size amount

Double-check the estimated Implied APY Orders on Exponent are market orders.

5

Click on Buy

The Yield Share Tokens bought (YT) will appear under “My Position”. Any new order will update your position.

As soon as a position is opened, it will automatically accrue the underlying yield to the Yield Share Tokens you held. This includes interests as well as incentives and points. YT holders need to manually claim yield distributions. Every claim will be counted towards PnL.
Income — Earn Fixed YieldLiquidity — Capture Trading Fees