Timeless, what is it? Discover the objectives and characteristics of this ecosystem as well as direct access to its website.
Timeless is a yield tokenization protocol where the yield tokens never expire.
Timeless splits user deposits into two types of yield tokens: Perpetual Yield Token (PYT), whose holders receive the yield generated by the user deposits, and Negative Yield Token (NYT), whose market price moves in the opposite direction as PYT.
This protocol enables the following use cases:
- Yield boosting: Boost the yield you earn from any supported farm by 1x-2x
- Yield hedging: Decrease the volatility of the yield you earn
- Yield speculation: Speculate on whether yield rates are going up or down
This ecosystem is built on the Ethereum Virtual Machine (EVM) and deployed to EVM-compatible blockchains.
Timeless, specialist in yield tokenization
Yield tokenization is taking a yield-bearing asset (e.g., Yearn’s USDC Vault) and splitting the yield stream into another token. In the context of Timeless, this means splitting into a perpetual yield token (PYT), whose holders receive the yield generated by users’ deposits, and a negative yield token (NYT).
Users deposit assets into Timeless to hit PYT and NYT, and burn PYT and NYT together to recover the assets. Each return source (e.g., Yearn’s USDC vault) corresponds to a pair of PYT and NYT, so users can specify which return source they want to use.
Yield tokenization is useful because it enables new financial instruments whose prices are correlated to the yield rate in different ways. This unlocks an entirely new market for yield boosting, yield hedging, and yield speculation that was simply not feasible without yield tokenization.
Furthermore, yield tokenization is another instance of the “tokenize everything” movement seen in crypto and decentralized finance. Tokenization is good for the same reason why the Web is good: it promotes a common standard and enable protocols and products to effortlessly work together like Lego pieces. This means whenever someone innovates, everyone else benefits as well since their product is now slightly more useful.
Timeless is dedicated to permissionless innovation and adopting common standards, so that it can remain a piece of vital infrastructure in perpetuity.
Perpetual Yield Token (PYT)
Timeless perpetual yield tokens (PYT) represent streams of future yield generated by the corresponding principal. 1 PYT always corresponds to 1 underlying principal, which makes accounting easier.
For example, say we have a PYT that uses the Yearn USDC vault to generate yield, then 1 PYT represents the right to claim the yield generated by 1 USDC in the Yearn USDC vault from now to forever in the future.
PYTs are useful because their prices move in the same direction as the yield rates of the yield-generating vaults they use, so it’s easy to use them to speculate on yield rates. They’re also useful for yield boosting, where you buy PYT off the market at a discount to boost the yield you earn.
Negative Yield Token (NYT)
Timeless negative yield token (NYT) is the byproduct of perpetual yield token (PYT). Whenever 1 PYT is minted, so is 1 NYT.
NYT is used when getting back the underlying principle: burning 1 PYT and 1 NYT together gives you back 1 underlying asset.
Holders don’t receive any of the yield generated by the underlying. NYT is useful because of the property that the price of 1 PYT and 1 NYT always add up to 1 in terms of the underlying asset, meaning the price of NYT always moves in the opposite direction as PYT, and thus in the opposite direction as the yield rate.
NYT is used for yield speculation, where you buy NYT to bet that the yield rate will go down in the future. It’s also used for yield hedging, where you convert part of your portfolio into NYT to decrease the volatility of the yield you earn elsewhere.