> For the complete documentation index, see [llms.txt](https://h00dr00st.gitbook.io/the-walking-man/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://h00dr00st.gitbook.io/the-walking-man/walking-yield/fixed-vs-floating.md).

# Fixed vs Floating Yield (PT & YT)

Walking Yield separates any yield-bearing asset into two distinct, tradeable components: **Principal Tokens (PT)** and **Yield Tokens (YT)**.

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## 1. Principal Token (PT) — "Lock Fixed Yield"

### What is it?

A **Principal Token (PT)** is like a zero-coupon digital bond. You buy it today at a discount, and at the maturity date (e.g. 27 March 2027), you redeem it **1:1** for the full underlying asset.

### The Newbie Walkthrough:

1. **You deposit**: 1,000 USDG into the market.
2. **Where does your money go?** Your 1,000 USDG sits safely in the **Morpho Blue Earn Vault**, generating interest every second.
3. **What do you receive?** Because PT is trading at a discount (for instance, $0.534 per PT), your 1,000 USDG buys you **1,872.66 PT-USDG tokens**.
4. **The Payoff**: When maturity arrives, you click **"Redeem"** on your dashboard.
   * 1,872.66 PT converts directly into **1,872.66 USDG**.
   * You just earned **+872.66 USDG in pure profit**.
5. **Risk Profile**: **Zero liquidation risk.** The price of crypto doesn't matter; your payout is mathematically guaranteed 1:1 at maturity.

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## 2. Yield Token (YT) — "Leverage Floating Yield"

### What is it?

A **Yield Token (YT)** represents the right to receive 100% of the variable interest generated by the Morpho Blue lending pool until maturity.

### Why buy YT?

* **High Yield Multiplier**: Because YT only represents the yield component, it is cheap compared to the principal.
* Holding 1,000 USDG worth of YT gives you the floating yield exposure of **$10,000 to $50,000** of underlying capital.
* If lending rates on Robinhood Chain increase, the yield streamed to your dashboard surges proportionally.

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## 3. Which One Should You Choose?

| Goal                                                                 | Recommended Product | Instrument               |
| -------------------------------------------------------------------- | ------------------- | ------------------------ |
| **"I want guaranteed, predictable profit without stress."**          | Short Rates         | **PT (Principal Token)** |
| **"I want maximum upside and believe lending rates will rise."**     | Long Rates          | **YT (Yield Token)**     |
| **"I want to earn passive trading fees from market volume."**        | Liquidity Provider  | **PT / SY LP Pool**      |
| **"I have a large block order ($50k+) and want zero price impact."** | Bilateral OTC       | **P2P Marketplace**      |