# Principal and yield tokens: separating a yield-bearing claim Yield tokenization splits a yield-bearing position into a principal claim and a claim on yield until an expiry. Pendle calls these PT and YT. PT’s intended redemption is measured in the market’s accounting asset, which may differ from the token delivered; underlying losses can reduce that redemption, so principal does not mean a capital guarantee. Evidence: [Pendle Introduction](https://docs.pendle.finance/pendle-v2/Introduction); [Principal Token (PT)](https://docs.pendle.finance/pendle-v2/ProtocolMechanics/YieldTokenization/PT); [Yield Tokenization Smart Contracts](https://docs.pendle.finance/pendle-v2-dev/Contracts/YieldTokenization) Canonical: https://degreesofsatoshi.com/encyclopedia/principal-yield-tokens/ Published: 2026-10-02 Substantively modified: 2026-10-02 Independently verified by an automated reviewer: 2026-10-02T19:18:00.092Z Data current through: 2026-10-02 AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied. ## Key facts - **PT:** The principal claim becomes redeemable without YT after maturity. ([Yield Tokenization Smart Contracts](https://docs.pendle.finance/pendle-v2-dev/Contracts/YieldTokenization)) - **YT:** The yield claim covers the period before expiry. ([Yield Tokenization Smart Contracts](https://docs.pendle.finance/pendle-v2-dev/Contracts/YieldTokenization)) - **Underlying loss:** Sustained negative underlying yield can reduce PT’s eventual accounting-asset value. ([Yield Tokenization Smart Contracts](https://docs.pendle.finance/pendle-v2-dev/Contracts/YieldTokenization)) ## Keep the accounting unit visible Imagine a market whose accounting asset is A, but whose underlying yield token W is worth 1.25 A. A claim intended to redeem one A of value corresponds to 0.8 W at that exchange rate, not one W. The actual wrapper and index determine the amounts. Buying that claim for 0.96 A implies a 0.04 A gain if the intended one-A redemption occurs. Fees, early-sale price and underlying losses can change the result. Evidence: [Principal Token (PT)](https://docs.pendle.finance/pendle-v2/ProtocolMechanics/YieldTokenization/PT); [Yield Tokenization Smart Contracts](https://docs.pendle.finance/pendle-v2-dev/Contracts/YieldTokenization) ## A yield token is a time-limited claim YT receives the applicable interest and rewards before expiry. Its right to future accrual ends at maturity; previously accrued amounts are separate claims. Paying for YT is therefore paying for an uncertain stream, not buying a perpetual income right. Evidence: [Yield Tokenization Smart Contracts](https://docs.pendle.finance/pendle-v2-dev/Contracts/YieldTokenization) ## The underlying strategy remains part of the position Pendle’s technical documentation describes an index that does not move down when the underlying exchange rate falls. During such a drawdown, new YT interest can pause and PT can ultimately redeem less accounting-asset value. Read the market’s accounting asset, maturity and underlying mechanism before interpreting a fixed-yield display. Evidence: [Yield Tokenization Smart Contracts](https://docs.pendle.finance/pendle-v2-dev/Contracts/YieldTokenization) ## Questions ### Does one PT always redeem for one underlying yield token? No. PT is defined in accounting-asset units. The amount of underlying or wrapper token can differ. Evidence: [Principal Token (PT)](https://docs.pendle.finance/pendle-v2/ProtocolMechanics/YieldTokenization/PT); [Yield Tokenization Smart Contracts](https://docs.pendle.finance/pendle-v2-dev/Contracts/YieldTokenization) ## Claims and scope ### principal-yield-tokens-quick-answer Yield tokenization splits a yield-bearing position into a principal claim and a claim on yield until an expiry. Pendle calls these PT and YT. PT’s intended redemption is measured in the market’s accounting asset, which may differ from the token delivered; underlying losses can reduce that redemption, so principal does not mean a capital guarantee. Scope: {"collection":"defi","dataAsOf":"2026-10-02","blockHeight":null} ### principal-yield-tokens-fact-pt PT: The principal claim becomes redeemable without YT after maturity. Scope: {"collection":"defi","dataAsOf":"2026-10-02","blockHeight":null} ### principal-yield-tokens-fact-yt YT: The yield claim covers the period before expiry. Scope: {"collection":"defi","dataAsOf":"2026-10-02","blockHeight":null} ### principal-yield-tokens-fact-underlying-loss Underlying loss: Sustained negative underlying yield can reduce PT’s eventual accounting-asset value. Scope: {"collection":"defi","dataAsOf":"2026-10-02","blockHeight":null} ## Sources - [Pendle Introduction](https://docs.pendle.finance/pendle-v2/Introduction) — Pendle. Principal/yield splitting and maturity accounting. Locator: Yield tokenization; PT; YT; maturity. Retrieved: 2026-10-02T18:53:22.586Z. - [Principal Token (PT)](https://docs.pendle.finance/pendle-v2/ProtocolMechanics/YieldTokenization/PT) — Pendle. Accounting asset is distinct from the token used to deliver redemption. Locator: Redemption Value; Key Properties. Retrieved: 2026-10-02T19:07:08.975Z. - [Yield Tokenization Smart Contracts](https://docs.pendle.finance/pendle-v2-dev/Contracts/YieldTokenization) — Pendle. Technical limitations qualify introductory fixed-yield descriptions. Locator: redeemPY; pyIndexCurrent; Negative Yield. Retrieved: 2026-10-02T19:07:09.098Z. ## Revision history - 2026-10-02: First publication after primary-source research and separate automated verification. ## Cite this entry Degrees of Satoshi editorial project. “Principal and yield tokens: separating a yield-bearing claim.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/principal-yield-tokens/