> For the complete documentation index, see [llms.txt](https://doc.torch.finance/telegram-usd/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://doc.torch.finance/telegram-usd/how-tgusd-works/use-cases/defi/yield-tokenization.md).

# Yield Tokenization

The yield tokenization market on TON allows users to split **stgUSD** into:

* **PT (Principal Token):** Represents fixed yield
* **YT (Yield Token):** Represents variable yield

For example, **FIVA** is one such protocol implementing this model. This mechanism enables **tgUSD** to support a broader range of DeFi strategies. The interaction and trading between PT and YT can **increase market demand for tgUSD → incentivize more users to mint tgUSD → boost tgUSD TVL**, forming a virtuous cycle.

<table><thead><tr><th>Strategy Type</th><th>Action</th><th width="192.9765625">Yield Source / Advantages</th><th>Risk Warning</th></tr></thead><tbody><tr><td>Expecting APY to Rise</td><td>Buy <strong>YT</strong> at a low price to gain leveraged exposure to yield increases</td><td>- YT is usually priced lower than the underlying asset, allowing users to amplify exposure with the same capital amount <br><br>- If <strong>YT</strong> is priced at 5% of the underlying, a 1% yield increase could raise its value by up to 20x <br><br>- FIVA and partner protocol points can also be leveraged</td><td>Higher losses if yields decrease</td></tr><tr><td>Expecting APY to Fall</td><td>Buy <strong>PT</strong> to lock in the current fixed return</td><td>- PT can be redeemed at maturity for a fixed amount of tgUSD, unaffected by APY changes <br><br>- Enjoys initial yield even if rates drop (e.g., 10% → 8%, still earns 10%)</td><td>Missed upside if yields rise</td></tr><tr><td>Expecting APY to Stay Stable</td><td>Provide liquidity to FIVA Pools</td><td>- Original protocol yield + trading fees + points from FIVA and partners</td><td>Minor impermanent loss (IL)</td></tr></tbody></table>