#yield tokenization

➤ Sky has launched a new fixed-yield product built on Pendle Protocol, offering depositors of its sUSDS stablecoin a locked-in annual percentage yield (APY) of 3.62%. ➤ This product, called Fixed Yield, utilizes Pendle's yield-tokenization infrastructure to split yield-bearing tokens into principal and yield components, allowing users to lock in a rate until a specified maturity date. ➤ The initiative aims to provide rate-sensitive depositors with a stable alternative to the variable Sky Savings Rate (SSR), which has been declining, and leverages Pendle's technology within Sky's own product interface.

➤ Pendle Finance has successfully shifted its co-incentive program exclusively to limit orders, resulting in a significant increase in swap volume and depth. ➤ Limit orders now constitute 71% of Pendle's swap volume, demonstrating a user preference for precise yield execution over traditional AMM swaps. ➤ The protocol's strategy of concentrating incentives on limit orders has nearly doubled monthly trading volume, with a focus on rewarding liquidity provision and controlling token supply.

➤ Yield tokenization, as exemplified by Pendle, separates yield-bearing assets into principal (PT) and yield (YT) tokens, allowing for independent trading and structured exposure. ➤ This mechanism enables users to lock in fixed yields (similar to bonds), speculate on future yield rate changes, or provide liquidity, with RWA yield tokens like tokenized Treasuries becoming a growing category. ➤ While offering advanced financial primitives and blurring the lines between TradFi and DeFi, yield tokenization introduces time-bound risks and complexity that require careful consideration, especially for newer DeFi users.