Welcome to FIVA! 🎉
FIVA Protocol is the first yield management protocol built on the TON blockchain. It allows you to fix your yield and access your future gains right now! Simply put, FIVA lets you earn better yields, helping you secure greater certainty and higher returns (i.e., higher APY 🔥). Sounds a bit complicated and unreal? Let us explain how it works as simply as possible!
Introduction to Optimizing Yield 📈
In DeFi on TON, you can place your TON into a yield farming pool to receive an APY that changes over time, much like token prices. Popular examples of such pools on TON are Tonstakers and Bemo.
APR often goes down… 😢
You joined a new pool with a 7% APR, only to see the yields drop to 3% a couple of months later. Sound familiar?
💡 What if you could “fix” this yield?
Source:https://tontech.io/stats/
If only I had more capital when APR goes up… 🤑
In a bull market, APR increases, and many of us think, “If only I could boost my capital.” While leveraging your assets by borrowing is an option, managing collateral and avoiding liquidation can be stressful.
💡 What if you could increase your yield exposure without liquidation risk?
Yield-bearing tokens 💰
💡 Yield-bearing tokens refer to any tokens that generate yield.
Examples:
- tsTON (from Tonstakers)
- stTON (from Bemo)
Introducing FIVA 🚀
There are two main parts to fully understand FIVA:
- Yield-Tokenization: We explain how FIVA splits yield-bearing tokens into their principal and yield components, PT (Principal Token) and YT (Yield Token), respectively. This opens up various ways to optimize yields.
- Yield-Trading: PT and YT can be traded via FIVA's AMM. By creating a yield trading market in DeFi, FIVA unlocks the full potential of yield, enabling users to execute advanced yield strategies.
What can you do to earn better yields with FIVA 💸
Passive Earning
- Fixed yield (e.g., earn fixed yield on tsTON)
- Earn extra yield without additional risks using the same asset you already own (e.g., provide liquidity with your tsTON)
Yield Trading
- Long yield (e.g., bet on tsTON yield going up by purchasing more yield)
- Or a mix of any passive and active strategies.
Yield Tokenization Basics 🏡
Yield tokenization involves dividing a yield-bearing asset into two parts: the principal and the yield.
A yield-bearing asset generates returns over time (e.g., tsTON, stTON, etc.). To illustrate this, think of a real estate property. A property generates rental income for its owner.
Now imagine splitting a real estate property into two components:
- Principal: The rights to the ownership of the property.
- Yield: The rights to the rental income from the property for a certain period.
At any point in time, you can combine both to get the whole property.
With tsTON as an example: Principal (Right to Principal of tsTON) + Yield (Rights to tsTON yield) = Yield-bearing asset (tsTON).
When you tokenize the yield, you can sell or trade the yield portion before it matures. This creates new ways to manage and speculate on yield. Suppose the maturity date is in one year:
- You can buy the Rights to Ownership at a discount. After one year, these rights allow you to redeem the property. The guaranteed value appreciation from the discounted purchase price to full ownership value represents the fixed yield/income.
- Alternatively, you can purchase only the yield portion (the Rights to Rental Payments) to receive rent for one year. If this costs $5000, you profit if you collect more than $5000 within the year and incur a loss if it yields less. This allows you to speculate on the property's yield. Think rental prices are going up soon and want some exposure? Buy the yield instead of paying for the entire property.
💡 FIVA is a marketplace where property owners can split and trade their principal (rights to the underlying) and yield (rights to rental payments) separately. Both Principal and Yield positions can be sold anytime (no lockup) even before maturity.
PT & YT in Fiva 💎
DeFi pools give you a yield-bearing position in return for staking or depositing tokens like Tonstakers give you tsTON (yield-bearing assets) in return for TON that you staked there.
In FIVA, the yield-bearing position can be split into two components:
- YT (Yield Token): Representing the yield-receivables of the position.
- PT (Principal Token): Representing the principal amount.
What are PT and YT Exactly? 🤔
For every yield-bearing position, there is an underlying asset. 💡 The underlying asset is used as a unit to value a yield-bearing position and calculate its APY.
The underlying is usually obvious, like TON in "Tonstakers Liquidity Pool."
Here are the exact definitions of PT and YT:
- 1 YT gives you the right to receive the yield of 1 TON staked in Tonstakers until maturity, claimable in real-time.
- 1 PT gives you the right to redeem 1 TON staked in Tonstakers upon maturity.
What Can You Do with PT & YT? 📊
Before Maturity:
- PT and YT can be minted from the underlying asset.
- PT and YT can be redeemed back into its underlying asset.
- YT holders can claim any accrued yield in real-time.
After Maturity:
- PT holders can redeem the underlying asset 1:1 without YT.
Anytime:
- You can buy and sell PT and YT on the open market using FIVA AMM. As such, PT and YT will always have a market price.
Analogy of PT & YT in Traditional Finance 🏦
In traditional finance, what FIVA does is akin to bond stripping. The principal and interest of bonds are separated, making PTs similar to zero-coupon bonds and YTs like detached coupons.
PT is the DeFi zero-coupon bond:
A zero-coupon bond is a bond sold at a significant discount to its face value and does not pay interest during its life. The bondholder receives the full face value at maturity. The difference between the purchase price and the face value is the investor’s profit. For example, if you buy a zero-coupon bond for $800 with a face value of $1,000 that matures in 3 years, you will receive $1,000 at maturity, earning a $200 profit over 3 years. You can sell these bonds on the open market anytime at market price.
YT is the DeFi detached coupon:
A detached coupon is part of a bond that has been separated from the bond itself and can be traded independently. A coupon bond pays regular interest to the bondholder until maturity. These interest payments, called coupons, are usually attached to the bond certificate. A detached coupon is one that has been separated from the certificate and can be redeemed for cash by anyone who holds it. For instance, if you have a coupon bond paying $50 annually for 3 years and detach the coupons, you can sell these coupons to someone else who wishes to claim that $150 over the 3 years. A buyer who purchases the detached coupon for less than $150 makes a profit over the 3 years.
Examples on Ethereum 🌐
Inspiration for our protocol is Pendle. It is the 10th biggest Dapp with 3.45 billion TVL according to Defilama as of July 4, 2024. They pioneered and popularized the yield management idea in the DeFi space and developed the methodology for how it can be done. That was a starting point for our protocol. It is an awesome project; please check it out!
This was our short explanation of FIVA. We hope it made things clearer for you. The work on the project is ongoing, and we will provide more precise documentation and explanation videos later.
Business Model and Adoption to TON 📈
FIVA is the first protocol on TON that allows users to trade yield. It is the next logical building block for the TON DeFi ecosystem. Since DEXs, Liquidity Pools, and Lending Protocols are already established, we are creating the next tool for the TON blockchain. This will attract more whales as it provides high fixed yields and will generate more transactions on the assets that are currently inactive in users' wallets (50,000,000 of staked TON is just frozen!).
There are a lot of liquidity staking protocols, such as Tonstakers, Bemo, and Hipo, will be interested in partnering with us. We will attract more attention and capital to their projects by offering high APY based on their assets. Before launching, we will collaborate with these protocols to attract our first users. Since we share the same user base, we can create a win-win situation through collaboration.
We are currently observing a boom in the number of daily active wallets on TON, indicating that the TON ecosystem is thriving. Now is the ideal time to launch such a venture!
Source:https://www.tonstat.com/
Our business model is viable because it is already a proven concept in traditional finance and through Pendle on Ethereum. This demonstrates that DeFi and finance in general need such instruments, and there is a market and demand for this protocol.
Additionally, our business model is sustainable as it allows us to earn money through trading and yield fees (as implemented on Pendle). It also enables the introduction of a governance token, which will be useful for the community and allow the project to raise more capital.
Moreover, our application through MiniApp is an unprecedented case where you can manage your yield using just your phone.
All these factors – a proven idea that works, the need for such a tool in the TON ecosystem, being the first on TON – make us confident that FIVA will be the next big protocol on TON, bringing significant value to the community and ecosystem development.
Future of Yield Management on TON 🚀
At FIVA, we are building the future of yield trading on TON. By tokenizing future yield, we are shifting the management of yield from passive to active. Our goal is to expand the TON DeFi ecosystem with new financial instruments and strategies, providing the community with more control, safety, and possibilities to manage their money.
Join us in developing the DeFi space on the TON blockchain. With FIVA, the future of yield is in your hands! 🌟