PT/YT Tokens

When a bridge facilitator funds a bridge loan through a Request contract, they receive two tokens: Principal Tokens (PT) and Yield Tokens (YT). Together, these tokens represent the bridge facilitator’s claim on the capital they advanced and the return they were promised.

For the operational lifecycle that mints and later unlocks these tokens, see Onboarding and Settlement.

Principal Tokens (PT)

PT represents the funded principal on a 1:1 basis with the asset deposited. If a bridge facilitator deposits 1,000,000 USDC, they receive 1,000,000 PT.

PT is senior in the redemption hierarchy. When the Request holds enough assets to cover the total PT supply, every PT redeems at exactly 1.0 (one unit of the underlying asset per PT). PT holders are made whole before any yield is distributed.

Yield Tokens (YT)

YT represents the agreed return that the bridge facilitator negotiated when submitting their offer. It is minted proportionally to the expectedReturn specified in the offer.

For example, if a bridge facilitator deposits 1,000,000 USDC with a 10% expected return:

• They receive 1,000,000 PT and 100,000 YT

YT is junior in the redemption hierarchy. YT only has value if the Request holds assets in excess of the total PT supply. If the strategy underperforms and the Request cannot fully cover the principal, YT receives nothing.

Redemption Hierarchy

The redemption formula defines a strict waterfall:

1. First, allocate to PT — Up to the full principal amount. Assets flow to PT holders until every PT is backed 1:1 by the underlying asset.

2. Then, allocate to YT — Any assets remaining after PT is fully covered flow to YT holders.

In mathematical terms:

principalAssets = min(totalAssets, ptSupply)
yieldAssets     = totalAssets - principalAssets

pricePerPT = principalAssets / ptSupply
pricePerYT = yieldAssets / ytSupply

Where:

• totalAssets is the total amount of the underlying asset held by the Request at redemption time
• ptSupply is the total supply of Principal Tokens
• ytSupply is the total supply of Yield Tokens

A bridge facilitator holding ptBalance PT and ytBalance YT can redeem:

redemptionAmount = (ptBalance * pricePerPT) + (ytBalance * pricePerYT)

Redemption Scenarios

The following table illustrates how redemption works across different performance outcomes. Assume a Request with 1,000,000 PT supply and 100,000 YT supply (representing 1,000,000 principal with 10% expected return).

Scenario	Total Assets	Principal Assets	Yield Assets	PT Price	YT Price	PT Holder Receives	YT Holder Receives
Shortfall	900,000	900,000	0	0.90	0.00	90% of principal	Nothing
Breakeven	1,000,000	1,000,000	0	1.00	0.00	100% of principal	Nothing
Partial yield	1,050,000	1,000,000	50,000	1.00	0.50	100% of principal	50% of expected return
Full yield	1,100,000	1,000,000	100,000	1.00	1.00	100% of principal	100% of expected return
Excess yield	1,200,000	1,000,000	200,000	1.00	2.00	100% of principal	200% of expected return

Reading the Table

Shortfall (900,000 total assets): The strategy underperformed. There is not enough to cover the 1,000,000 principal. PT holders share the loss proportionally — each PT redeems for 0.90 instead of 1.00. YT holders receive nothing because the principal is not fully covered.

Breakeven (1,000,000 total assets): The strategy returned exactly the principal. PT redeems at 1.00. YT still receives nothing because there is no excess above the principal.

Partial yield (1,050,000 total assets): The strategy returned more than the principal but less than the expected return. PT redeems at 1.00 (fully covered). The remaining 50,000 goes to YT holders, giving each YT a price of 0.50 — half the expected return.

Full yield (1,100,000 total assets): The strategy delivered exactly the expected return. PT redeems at 1.00. YT redeems at 1.00. The bridge facilitator receives their full principal plus the full expected yield.

Excess yield (1,200,000 total assets): The strategy outperformed. PT redeems at 1.00. The excess 200,000 flows entirely to YT, giving each YT a price of 2.00. YT holders capture all the upside above the principal.

Risk Profile

The dual-token model makes the risk and return characteristics of a bridge loan explicit and separable.

PT Risk

PT holders bear principal risk. If the underlying strategy underperforms and the Request cannot be fully repaid, PT holders share the shortfall proportionally. However, PT is always senior to YT — any available assets are allocated to PT first.

In practice, principal losses require the strategy to lose money (e.g., the RWA fund defaults or the collateral is liquidated at a loss). The protocol design bounds this risk:

• Bridge loan capital can only be used for its specified purpose (enforced by the Facility)
• The intent cannot be resolved while the Request is unpaid, preventing premature LP claims
• Collateral management and liquidation thresholds are configured in the Position Manager

YT Risk

YT holders bear yield risk. YT only pays out if the total assets exceed the PT supply. This means YT absorbs all the downside before PT is impacted. In the shortfall scenario above, YT holders lose their entire expected return while PT holders still recover 90%.

Conversely, YT captures all the upside. If the strategy outperforms, every unit of excess flows to YT holders.

Combined Holding

A bridge facilitator who holds both PT and YT from the same offer has an economic position equivalent to: “I advanced X principal and expect Y return. I get my principal back first, and then my return — but the return is only paid from actual profits.”

Transferability

Both PT and YT are standard ERC-4626 vault shares, which means they can be transferred between addresses (subject to any TransferGuard restrictions configured on the Request).