Thread by @2lambro

#16 @prism_protocol
Splitting tokens into yield & principal, enabling fix yield & yield trading

In this thread
1. TLDR of what is Prism
2. History of Prism
3. How does it work
4. What does it enable, what strategies you can do
5. Prism #airdrop, #cosmos
6. Summary

#IBC

TLDR

Prism is a Cosmo L1 blockchain that enables users to break their yield bearing assets and break it into Principal token (PT) & Yield Token (YT).

PT & YT can be redeemed at mature date & trade freely. Allowing speculation on yield price.

History of Prism
Prism was initially built on the @terra_money network with its PT & YT around Luna which hit 800m TVL at peak with 70m liquidity it’s native AMM.

Well then luna got rekt. The team didn’t stop there though, they decided to be a Layer 1 with #cosmos SDK + #IBC enabling the PT & YT design into the @cosmos ecosystem & plan to extend to NON IBC outpost.

How does it work

1. Yield bearing asset in liquid staking derivative ( CT )
2. Prism Hub will break them in Pricipal Token (PT) + Yield Token (YT)
3. Users can trade PT or YT or wait till maturity date & redeem.

Example
Assume Atom price is $10, Atom’s variable yield is 20%
Market price
ATOM PT = 0.85
ATOM YT = 0.15

Meaning
• You can buy PT at 0.85 atom and hold for 1 year u can get 1 ATOM,
• You can pay 0.15 atom for the right to receive the staking yield of 1 ATOM next year

Do note these numbers are number of atom not USD price, so

• if atom price gone down more than 15% value in USD u still lose
• If atom price go up, you will earn 0.15 * USD value of atom at the time

What does it enable

• Higher capital efficiency.
• Fix rate yield ( in number of tokens )
• Yield trading

Interesting strategies u can look at

• Bullish on token long term & if YT is in discount you can sell PT & buy YT.
• Buy “discounted” PT & wait till it matures

• Speculated on yield that are variable e.g. if X token’s yield is based on network usage or trading fee, events or growing activity can effect the true output of “varible yield”

Delegated ur atoms to prism validator for airdrop

TLDR - redelegate your stake atoms to prism validator for airdrop

https://twitter.com/prism_protocol/status/1615675181380558849

Summary

Respect to the PRISM team for sticking around & rebuilding. I like teams/ builders that just put in the work and constantly pivot, this shows resistance.

PT & YT is not the most innovative design, the key is what asset they enable & the liquidity of PT & YT tokens.

Off the top of my head I think they are the first yield trading protocol in the cosmo ecosystem, do correct me if i am wrong

it will be interesting the team’s ability in executing the idea.

P.S they are hinting OSMO pair, might be interesting.

Happy Chinese New Years Guys!
Thank you for reading!

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