Choosing an ONyc Yield Strategy

Through Exponent, ONyc can be structured across different yield and risk profiles, giving users a way to position around their objectives rather than holding ONyc in a single form.

Exponent enables two core markets for ONyc: rate trading and risk tranching.

Rate trading separates principal from future yield, allowing users to lock in a fixed rate through Principal Tokens (PT) or take leveraged exposure to future yield through Yield Tokens (YT).

Risk tranching separates ONyc exposure into Senior and Junior positions, allowing users to exchange a portion of yield for first-loss protection through srONyc, or provide that protection in exchange for amplified yield through jrONyc.

Together, these markets create four broad ONyc strategies: fixed yield, leveraged yield, protected yield, and amplified yield.

Fixed Yield

Through Exponent's rate trading markets, ONyc and srONyc can be separated into principal and future yield. Principal Tokens (PT) allow users to lock in a fixed return through a defined maturity rather than remaining exposed to changes in the underlying asset's future yield.

PT-ONyc

PT-ONyc represents the principal component of ONyc for a specific maturity. It can be acquired at a discount to its maturity value and redeemed for ONyc at maturity, with the difference determining the fixed return. This provides a way to lock in an ONyc-denominated yield in advance.

PT-ONyc can also be used across DeFi as collateral on Kamino and in looping strategies on Loopscale.

Best suited for users seeking predictable returns through a defined maturity.

Explore PT-ONyc.

‍

PT-srONyc

PT-srONyc applies the same fixed-rate structure to srONyc.

At maturity, PT-srONyc is redeemable for srONyc rather than ONyc. This combines a fixed yield with the first-loss protection provided by the Junior tranche.

Best suited for users seeking fixed yield with a more protected ONyc risk profile.

Explore PT-srONyc.‍

Leveraged Yield

The other side of Exponent's rate trading market is the Yield Token (YT), which isolates the future yield generated by ONyc or srONyc through a specific maturity.

Because YT provides exposure to the yield generated by a larger amount of underlying principal without requiring the user to fund that entire principal position, it creates capital-efficient, leveraged exposure to future yield.

YT-ONyc

YT-ONyc provides exposure to the yield generated by ONyc through maturity.

The position benefits when realized yield over the remaining term exceeds the rate implied by the market price of YT. Conversely, it can underperform when realized yield is lower than the rate implied by the market.

Best suited for users who expect future ONyc yield to outperform the rate currently implied by the market.

Explore YT-ONyc.

‍

YT-srONyc

YT-srONyc provides the same type of leveraged exposure to the future yield generated by srONyc.

Rather than holding the Senior principal itself, the position isolates the yield generated by the Senior side of the ONyc tranching market through maturity.

Best suited for users seeking capital-efficient exposure to future srONyc yield.

Explore YT-srONyc.

Protected Yield

Through Exponent's ONyc Tranching Market, ONyc exposure is separated into Senior and Junior capital.

srONyc represents the Senior side of the structure. Junior capital sits beneath Senior in the loss waterfall, meaning losses are allocated to the Junior tranche before they affect Senior.

The market maintains a minimum 20% Junior protection level, although the actual level of protection can be higher depending on the composition of the market.

In exchange for this protection, Senior gives up a portion of the underlying yield to Junior. The resulting srONyc yield therefore varies with the utilization and composition of the tranching market.

srONyc can also be used elsewhere in DeFi, including rate trading through Exponent and looping strategies through Loopscale.

Best suited for users seeking ONyc exposure with an additional layer of first-loss protection.

Explore srONyc.

Amplified Yield

jrONyc represents the Junior side of Exponent's ONyc Tranching Market.

Junior capital earns its underlying share of ONyc yield plus yield redirected from the Senior tranche, creating the potential for higher yield than untranched ONyc.

In exchange for that higher potential yield, jrONyc provides the first-loss capital protecting srONyc.

If losses occur, they are allocated to the Junior tranche before the Senior tranche is affected. The Junior position therefore exchanges greater loss exposure for greater potential yield.

The yield available to jrONyc varies with market utilization and the relative amount of Senior and Junior capital in the structure.

Best suited for users seeking higher potential ONyc yield and willing to assume first-loss exposure.

Explore jrONyc.

One Asset, Multiple Strategies

Exponent extends ONyc from a single yield-bearing asset into a set of configurable yield and risk positions.

Through rate trading, users can choose between fixed and leveraged exposure to ONyc or srONyc yield. Through risk tranching, users can choose between protected Senior exposure and higher-yielding, first-loss Junior exposure.

The two markets can also be composed. srONyc, for example, can itself be separated into PT-srONyc and YT-srONyc, combining the Senior tranche's protected risk profile with either fixed or leveraged yield exposure.

This creates a spectrum of ONyc strategies through a single venue, from protected fixed-rate exposure to leveraged and first-loss positions.