Trade offers access to volatile yield markets, opening the door to sophisticated strategies like hedging borrowing rates, leveraging exposure to specific assets through yield appreciation without liquidation risks, or arbitrage.

Since Income Tokens give up any accruing volatile yield from the DeFi products backing them, all this future volatile yield becomes available in tokenized form (yield shares) for those looking to get exposure to it. This enables traders to speculate and gain leveraged exposure to these yields for potential profit — whether through price fluctuations (similar to trading spot assets), arbitrage opportunities, or simply capturing the yield produced.

Similar to trading derivative products (e.g. options), trading yield is an active position and its performance highly depends on a trader’s skill. For instance, the rate of USDC lent on a lending protocol is influenced by several factors like utilization, borrowing demand, supplied, or incentives. Traders trading yield markets can leverage such factors to profit from inefficiencies they perceive.

The yield that traders trade on Exponent, referred to as “implied yield”, does not follow exactly the underlying yield of a product. Instead, it moves through market forces. The “implied yield” 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. This means if the implied yield 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.

Ultimately, yield shares capture all the underlying yield accruing, including airdrops from converted points. If you believe that the current volatile yield is undervalued and likely to rise, you can profit and earn more yield than your initial investment.

1 yield share = 1 token earning volatile yield in the underlying position. This essentially gives you leveraged exposure to the volatile yield, as it requires less capital to get exposure to the yield than depositing the same amount directly into the underlying yield source.

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Start Trading Volatile Yields

Trading yield on Exponent is as straightforward as trading on an AMM. To open a position:

1

Head to exponent.finance/trade

2

Select the market you wish to trade

Use either the dropdown or top bar.

3

Input your trade size

Double-check the estimated Implied Yield. Trades on Exponent are market orders.

4

Click on Trade

Your open position will appear under “My Position”. Any new order will update your position.

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