The first yield trading application on Linea is here! Splice Finance allows users to lock in and earn fixed yields or maximize points and variable yield from interest-bearing assets.
Native yield trading allows users to split their yield-bearing tokens into two distinct components: Principal Tokens (PTs) and Yield Tokens (YTs). This approach provides flexibility and maximizes earning potential by enabling users to choose between fixed and variable yields.
Here’s how it works and what you need to know about Splice.
Splitting Interest-Bearing Tokens
Splice allows users to earn fixed yields or variable yields by splitting yield-bearing tokens into two:
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A Principal Token (PT) which can be redeemed for 1 unit worth of the accounting token at maturity.
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i.e. 1 PT weETH can be redeemed for 1 ETH worth of weETH at maturity.
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PTs can be bought at a discount to lock in fixed yields i.e. you pay 10 ETH for 12 PTs which matures in 1 year, earning you 2 ETH or 20% APY.
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A Yield Token (YT) which accumulates all the yield and points of the yield-bearing token.
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i.e. 1 YT weETH accumulates the ETH staking yield and LRT points of 1 weETH until maturity.
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YTs on Linea also receive LXP-L on top of the base yields.
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YTs expire worthless at maturity as all yields and points have been distributed.
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Splice Liquidity Providers
Liquidity providers on Splice earn extra trading fees on their tokens, earning high yield points without giving up point exposure. Liquidity providers hold a mix of PTs and YTs in a liquidity pool, continuing to earn the underlying yield while earning trading fees from those who buy or sell PTs and YTs. By using Splice, liquidity providers also earn extra LXP-L and LRT points due to partner boosts, as compared to just holding the asset.
Splice and Linea
By launching a yield trading hub on Linea, Splice enables Linea users to access a new asset class and primitive on the chain. Not only does Splice introduce more ways to earn yield, it opens up more potential integrations in yield derivatives vertical on Linea.
Visit app.splice.fi for more information.