ySOL

Overview

A yield token (ySOL) is an SPL token that represents the yield component of a fixed-term bond. Upon maturity, the holder of the ySOL can redeem the token for the underlying yield. 1 ySOL is equal to the yield generated by 1 PSOL until maturity.

For example, say Alice stakes 100 SOL into Pye for a period of 3 months starting in September 2025. She receives 2 tokens:

• 100 pSOL-SEP24-NOV25

• 100 ySOL-SEP24-NOV25

The yield component (100 ySOL-SEP25-NOV25) will receive all the yield generated by the principal component (100 PSOL-SEP25-NOV25) throughout those 3 months. Alice can redeem her 100 ySOL for the underlying yield at maturity.

​Minting

To calculate the number of ySOL tokens that will be issued upon deposit, we use the following formula:

$$YSOL_{mint} = P \cdot \left(\frac{T-t_n}{T-t_0}\right)$$

where:

• $P$ is the principal amount in native units (eg. SOL),

• $t_0$ is the issue date of the bond,

• $t_n$ is any date before maturity

• $T$ is the maturity date of the bond

Unlike principal tokens, ySOLs are not minted 1:1 to the deposit. The number of ySOL tokens minted are relative to the total lockup period $T-t_0$.

Here are some scenarios:

• User stakes on the issuance date of the bond, where $T - t_n = T-t_o$

  , and yield tokens are minted 1:1 to principal PP,

• User stakes during the middle of the term, where $T - t_n < T-t_o$ , and less yield tokens are minted, proportional to the time remaining,

• User stakes ahead of the issuance date, where $(T - t_n) > T-t_o$, and more yield tokens are minted, proportional to time remaining until issuance starts.

​Pricing

For a single-strip bond, where only one cash flow (either a single coupon payment or the principal) is stripped and priced separately, the $PV_{\text{coupon-strip}}$ is given by:

$$PV_{coupon-strip}= \frac{C}{(1+y)^{t}}$$

where:

• $C$ is the single coupon payment being stripped and traded,

• $t$ is the time in years until the coupon payment is received,

• $y$ is the discount rate or yield.

​Redeeming

At maturity, ySOL token holders can redeem their ySOL tokens for the underlying yield pro rata. To calculate the repayment we use:

$$Y_{redeem} = \frac{YT}{1}$$

where:

• $YSOL$ is the number of yield tokens being redeemed,

• $YSOL_{redeem}$​ is the yield being paid out (eg. SPL).