YSOL

Learn more about Yield SOL (YSOL) and how they are used in Pye.Fi

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),

• $t0$ is the issue date of the bond,

• $tn$ 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 $T−t0$.

Here are some scenarios:

• User stakes on the issuance date of the bond, where , and yield tokens are minted 1:1 to principal $P$,
• 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 present value 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.

For a multi-strip bond, where the bond is stripped into all its component cash flows (coupons and principal) and each is priced separately, the present value of each coupon strip $PV_{\text{coupon}, i}$ is given by:

$$PV_{coupon, i}= \frac{C_i}{(1+y_i)^{t_i}}$$

where:

• is the i-th coupon payment received at time $t_i$,
• is the time in years until the i-th coupon payment is received,

• $y_i$ is the discount rate or yield for the i-th period.

The total present value $PV_{\text{coupons}}$ of all coupon strips is the sum of the present values of each individual coupon strip:

$$PV_{\text{coupons}} = \sum_{i=1}^{n} \frac{C_i}{(1 + y)^{t_i}}$$

where:

• $n$ is the total number of coupon payments,
• $C_i$ is the i-th coupon payment,
• $t_i$ is the time in years until the i-th coupon payment is received,
• $y_i$ is the discount rate or yield for the i-th period.

​Redeeming

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

$$YSOL_{redeem} = \frac{YSOL}{1}$$

where:

• $YSOL$ is the number of yield tokens being redeemed,
• $YSOL_{redeem}$ is the yield being paid out (eg. SPL).