> For the complete documentation index, see [llms.txt](https://praxis-4.gitbook.io/praxis/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://praxis-4.gitbook.io/praxis/documentation/advanced/pt-yt-trading.md).

# PT/YT Trading

How to trade PT and YT on the secondary market, and what each strategy means for your risk profile.

{% hint style="warning" %}
The PT/YT secondary market is a planned feature, not yet live. This page describes how it will work when the liquidity layer launches.
{% endhint %}

When you deposit into Praxis, you receive two tokens: **PT** (your claim on the original deposit) and **YT** (your share of vault yield). Both are standard ERC-20s — which means they can be traded independently on the open market.

This creates two distinct strategies for users who never deposited into the vault directly.

***

## Buying PT — Fixed Yield

When a Praxis depositor wants to exit early, they can sell their PT rather than wait for maturity. Buyers on the secondary market can pick up this PT at a **discount to face value**.

**Example:** 100 PT redeems for exactly 100 USDC at maturity. If you can buy 100 PT today for 97 USDC, you lock in a guaranteed 3 USDC gain — a fixed \~3% return. On the maturity date, you redeem and pocket the difference.

This is the Praxis equivalent of buying a fixed-rate bond. The implied yield is determined by the discount, not by the vault's floating APY.

{% hint style="info" %}
Users familiar with [Pendle](https://pendle.finance) will recognize this mechanic — Praxis PT works similarly. The key structural difference is on the YT side (see below).
{% endhint %}

### Who trades PT

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**Yield seekers**

You want a predictable, guaranteed return without any exposure to markets, games, or vault APY variance. They Buy PT at a discount then redeem at face value at maturity.
{% endcolumn %}

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**Capital preservation**

You want your funds deployed safely with a known upside. PT gives you a locked-in return and zero downside beyond the discount you paid.
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### The trade-off: no YT, no markets

PT alone gives you **no access to Praxis prediction markets or games**. All market activity runs exclusively on YT. A PT-only position is a pure fixed-yield hold.

That said, PT and YT are independent tokens. If you buy PT and later want to participate in markets, you can acquire YT separately whether by depositing USDC yourself to mint it, or by buying it on the secondary market.

***

## Buying YT — Yield Exposure

YT represents the yield side of someone else's deposit. When you buy YT on the secondary market, you are acquiring:

* The **yield already accumulated** in that YT since the epoch started
* The right to **future yield** the vault will generate through the rest of the epoch

This gives you leveraged exposure to vault yield without depositing USDC yourself. If the vault APY is 10% and you buy YT at a fraction of the underlying deposit value, your effective yield rate on capital deployed can be significantly higher.

### Who trades YT

{% columns %}
{% column %}
**Yield bulls**

You believe the vault APY will stay high or increase. Buying YT lets you amplify your yield exposure: more upside if you're right, with the cost of YT as your only capital at risk.
{% endcolumn %}

{% column %}
**Market participants**

You want to use Praxis prediction markets or games but don't want to lock up a full USDC deposit. Buying YT gives you the token you need to enter positions immediately.
{% endcolumn %}
{% endcolumns %}

### The risk: full loss is possible

{% hint style="danger" %}
Buying YT means giving up principal protection. Unlike depositing USDC (where your PT always guarantees your principal back), the USDC you spend to acquire YT carries no such guarantee. If vault yield underperforms expectations, or if you hold YT into a period with low APY, the value you recover at maturity may be significantly less than what you paid.
{% endhint %}

This is the explicit trade-off: higher potential returns and market access, in exchange for accepting the risk that the yield component doesn't materialize as expected.

***

## PT vs YT: choosing your position

|                      | **Buy PT**                               | **Buy YT**                                                      |
| -------------------- | ---------------------------------------- | --------------------------------------------------------------- |
| What you hold        | Claim on the underlying deposit          | Right to vault yield (accumulated + future)                     |
| Return type          | Fixed — locked in at purchase            | Variable — depends on vault APY                                 |
| Risk                 | Minimal — discount is your only exposure | Full — purchase value can go to zero                            |
| Market access        | No — prediction markets require YT       | Yes — YT is the bankroll for all market activity                |
| Principal protection | Yes — PT always redeems 1:1 at maturity  | No — you have no PT claim                                       |
| Best for             | Fixed yield, capital preservation        | Yield speculation, market participation without a vault deposit |

***

## Getting both

If you want fixed yield **and** market access, you can hold both tokens simultaneously — acquired separately or by depositing USDC yourself (which mints PT + YT together). The two tokens are fully independent and can be combined in any ratio that matches your strategy.

See [PT & YT](/praxis/documentation/how-it-works/pt-and-yt.md) for the full mechanics of how the tokens work from the depositor's perspective.