[#Studying River and Coin Terminology!]
📌 LP / YT ??
As someone who has mainly focused on chart study and trading, I wasn't familiar with terms like LP or YT.
(Although both involve entrusting money to receive interest, the concepts are different)
I didn't immediately understand what YT meant in the collaboration with Pendle below... There are probably many people like me who have only approached it casually.
👉🏻(To summarize briefly) LP is the concept of lending money to an exchange and receiving fees, while YT is the concept of buying and selling rights to interest income after depositing money.
1️⃣ LP ??
= Liquidity Pool
- Providing assets to a liquidity pool
: In simple terms, it's like "putting two types of money in a bank and earning exchange fees."
Example) If you deposit satUSD and USDT together, the exchange uses that money when people exchange it. Then, every time a transaction occurs at the exchange, fees are generated, and you receive a portion of those fees.
* A point to note here is that if the coin prices fluctuate rapidly, the coins will automatically swap with each other, which can lead to impermanent loss (IL) if prices are unstable.
* Mainly on platforms like PancakeSwap, Uniswap, etc.
2️⃣ YT ??
= Yield Token
- Tokenizing only the interest income of a specific token.
* Mainly conducted on platforms like Pendle
: Normally, when you just deposit coins, you earn interest, but Pendle splits that deposit into two parts.
1) PT (Principle Token) = Principal part
= Usually purchased at a discounted rate, where the principal is guaranteed even if the interest is low (feels like a fixed-rate bond).
2) YT (Yield Token) = Interest part
= The interest amount is uncertain, but the income can vary depending on the interest rate.
Example) When you deposit satUSD, you earn interest, and you buy and sell the rights to receive interest from YT.
* PT is for those seeking stability, while YT feels like betting on rising interest (trading), and there is also a neutral structure where you hold both PT + YT.
@RiverdotInc @River4fun
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