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Exponent is a yield exchange protocol on Solana for fixed-rate and leveraged yield farming. Users can exchange their productive yield assets (e.g. Jito’s VRTs, lending positions, yield-bearing tokens) for a fixed return or amplified exposure to their yield.

Exponent has been built to enable anyone to take directional views on where they expect APYs from DeFi markets to be in the future (e.g. in 1 month, 6 months, 1 year, etc):

• If you anticipate a decline in the APY, you can secure a fixed APY and protect against it.

• If you expect a higher realized APY, you can maximize your exposure to it and generate more returns.

These products are accessible through the Exponent front-end:

• Income – Exchange variable yields for fixed yield tokens and earn predictable returns at maturity. If you expect variable APYs to decline or look for passive management.

• Farm – Get leveraged exposure to variable yields and protocol points by buying Yield Tokens at an Implied APY. If you believe the current implied APY is undervalued and the underlying APY will realize higher yield at maturity.

• Liquidity – Earn extra yield on your productive assets by supplying them into Liquidity Vaults and providing liquidity to yield markets, with minimal impermanent loss if held to maturity. If you are neutral on where APYs will be at maturity.

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Overview

At its core the protocol is powered by a yield stripping mechanism, which separates a DeFi product’s yield from its principal value over a specific maturity, creating two tradable assets:

• Income Token (PT) — fixed yield on principal: Represents the principal deposited into a DeFi product, locked until maturity. It trades at a discount, reflecting the remaining future yield being sold off, and reaches a 1:1 price with the principal at maturity, realizing a fixed return when claimed.

• Yield Token (YT) — variable yield earned by principal: Represents the variable yield earned by the principal deposited in the DeFi product and sold off by Income Token holders. Its price reflects the remaining future yield distributed to 1 share of yield (for 1 principal) until maturity.

These tokens can be exchanged through Exponent’s AMM — a novel Solana-based AMM designed specifically for yield assets with maturities. Liquidity providers can supply liquidity to this AMM via Liquidity Vaults and earn additional yield on their productive assets through trading fees.

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Exponent core contributors

Our core contributors have extensive experience building and working in Solana for leading protocols since 2020. We are backed by an amazing group of investors which include RockawayX, Solana Ventures, Cherry, Mechanism Capital, Robot Ventures, as well as numerous angels from protocols like Squads, Drift, Kamino, marginfi, Pyth, among others.

Reach out to us at team[at]exponentlabs.xyz

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