> ## Documentation Index
> Fetch the complete documentation index at: https://v1-docs.exponent.finance/llms.txt
> Use this file to discover all available pages before exploring further.
# Income
> Generate stable yields through Income Tokens regardless of market conditions
Income features the Income Tokens issued by Exponent. They offer **fixed, predictable yields** for assets like SOL, USDC and more, and are collateralized by assets deposited into underlying DeFi protocols.
Similar to how people balance their crypto holdings between volatile assets and stablecoins, Income Tokens are a great way to balance variable yield positions with stable yield positions. Ideal for users looking for protection against yield downturns or wanting less active management of their positions.
Income Tokens are not locked positions — they can be sold at market price through Exponent’s AMM at any point in time before maturity.
## A new fixed-income primitive for Solana
Exponent's fixed yield tokens introduce a new asset class to Solana DeFi that can fit into any DeFi portfolio:
An Exponent Income Token is essentially **a future claim** on an asset (principal) locked in a DeFi position for a defined period:
1. It **gives up any variable yield (including points)** accrued by the principal token deposited into the underlying protocol until maturity,
2. Allowing traders on the other side to **buy and receive** the yield earned by the principal token.
Exchanging a yield-bearing token or DeFi position (e.g. JitoSOL) for an Exponent Income Token (e.g. PT-JitoSOL) is essentially swapping the variable yield of the position for a fixed yield.
In return for forgoing this variable yield, Income Token holders gain the right to redeem at maturity the full principal deposited, where 1 Income Token (e.g. PT-JitoSOL) equals 1 unit of the principal asset (e.g. 1 SOL in JitoSOL) — enabling them to realize **a fixed return on the principal amount**.
## Fixed Yield through Price Appreciation
An Income Token **trades at a discount** to the full value of the principal deposited in the underlying protocol, as all the future variable yield is sold off until maturity and the principal remains locked.
This discount equals the **market's pricing of the remaining future yield** and is represented as an **Implied APY**.
As the Income Token nears maturity, this discount typically narrows, reflecting the decreasing amount of future yield.
At maturity, Income Tokens can be redeemed for **the total value of the locked principal amount**, realizing the fixed yield, as holders claim more units of the asset than they initially spent to purchase Income Tokens.
When you exchange your productive asset (e.g. kySOL) for an Income Token (e.g. PT-kySOL) at a 15% fixed APY, you are effectively locking in a predetermined yield, signaling that you do not expect kySOL to generate a 15% or higher APY by the maturity date:
* **If kySOL’s APY is below 15% at maturity**, you will receive your fixed APY (denominated in SOL) along with additional kySOL.
* **If kySOL’s APY exceeds 15% at maturity**, you will receive fewer kySOL than you would have earned by holding kySOL directly. But you did not lose value on the principal invested — you simply earned less yield compared to holding kySOL without locking in a fixed return.
## Key concepts of Income Tokens
Income Tokens are generally passive products, requiring **little management** beyond claiming the underlying asset and profits at maturity. However, there are some concepts every Income Token holder should be aware of:
The fixed yield is not a distributed yield (like staking SOL and earning rewards). Instead, it represents the difference between the Income Token purchase price and the face value of the underlying asset, realized at maturity. For Income Tokens, the yield is embedded in the discounted purchase price and is fully realized at maturity, rather than through ongoing yield distributions. There is no yield to claim.
All variable yields (including emissions/points) are tokenized into yield share tokens and passed to their holders. This means that by purchasing Income Tokens, you are not entitled to any points or incentives.
The price of an Income Token will fluctuate until maturity, which is normal. Its value depends on factors like trader demand for volatile yield, the maturity date (typically, the further from maturity, the lower the price), and changes in the underlying protocol. The important part is always buying the Income Token below the underlying asset price.
Income Tokens give the future right to an asset deposited in an underlying protocol. If something happens to the underlying protocol, Income Token holders might not be able to redeem the full token amount at maturity. Always ensure you trust the underlying protocols and their smart contracts. Exponent takes extensive measures before integrating a protocol but cannot guarantee its safety.
Low liquidity can prevent users from buying or selling Income Tokens. When buying, if liquidity is insufficient, users may alternatively reduce their position size or provide liquidity (which mints Income Tokens and gives exposure to fixed yield). When selling, if liquidity has become too thin, it may be preferable for large holders to wait until maturity to avoid suffering losses from price impact.
### Management
For monitoring your Income Tokens, you can use the **Portfolio** page to view your position value and future net value at maturity.
The **Withdraw** tab (under the Income page) allows you to manage your current position if you want to get back your funds before maturity. You can always sell your position on the open market for the underlying asset before maturity. Price impact and AMM fees incur when selling Income Tokens before maturity.
At maturity, Income Tokens can be redeemed for the underlying asset backing them at no cost.
## How do Income Tokens generate a fixed return
Income Tokens are future “claims” on locked assets deposited into underlying protocols (e.g. marginfi, Kamino, etc).
To create Income Tokens, the protocol deposits assets into an underlying protocol and locks this principal amount for a fixed maturity — from these locked principal tokens, Income Tokens are issued and available to buyers. The variable yield earned by the principal is tokenized into *Yield Tokens*.
Income Token holders do not receive any variable yield for the whole maturity; instead, they "sell" any future yield of a DeFi product/position, causing Income Tokens to trade at a discount before maturity. As maturity approaches, Income Tokens gradually gain value relative to the underlying asset, as less yield is being sold and less time remains to redeem the underlying.
At maturity, since no more yield is accruing to the Yield Tokens, holders can burn their Income Tokens and redeem the principal assets, realizing a fixed return on the notional amount.
### Income Tokens Price = Fixed Return
This price difference between an Income Token relative to its principal asset (e.g. SOL) is the fixed return at maturity. This means that when buying 1 marginfi SOL Income Token (e.g. PT-mSOL), the investor receives the right to 1 SOL for 1 Income Token. However, this SOL remains locked until maturity, requiring the Income Token holder to wait until then to claim it. Since the maturity value is known (in principal unit value, how much asset per Income Token), buyers can calculate expected returns based on the discount.
For example, purchasing marginfi SOL at 0.95 SOL would yield 1 SOL at maturity, providing a fixed return of 5.26% ((1-0.95)/0.95)\*100).
### Income Tokens Issuance
Income Tokens are minted by liquidity providers when they add liquidity to the AMM through Liquidity Vaults. The market liquidity for Income Tokens is tradable for the productive asset they are derived from. For example, a marginfi USDC Income Token is paired with mUSDC in the AMM, and a Kyros SOL Income Token is paired with kySOL.
### Yield Volatility Sensitivity
Given the correlation between Income Tokens and Yield Tokens (1 Income Token + 1 Yield Token always equals 1 unit of the principal asset), trading Implied APYs impacts the price and APY of Income Tokens belonging to that same market.
This means Income Tokens can also be used to short Implied APYs: when variable yields decline, Income Token values increase, and vice versa.
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## Get Started
To decide which token to choose, look at the underlying asset, maturity and underlying protocol to evaluate which product corresponds the best to your needs.
The app will show you the projected fixed APY, taking into account your order and price impact associated with it.
This is a buy order; make sure to select the slippage you are fine with and review the price impact. You can always split your order into smaller transactions if the price impact is important.
Your funds will be swapped for Income Tokens.
You can now see your position under the Manage Tab and wait until maturity to redeem the underlying asset and realize your fixed return.
Once purchased, your Income Token can always be sold on the open market through the Withdraw tab. Double-check the price, as before maturity the price of Income Tokens is volatile. At maturity, there is no price impact, and the price of an Income Token aligns 1:1 with the principal asset.
Income Tokens are fully fungible SPL tokens that can be used across Solana as liquidity pairs on AMMs, collateral on lending platforms, and more.