Yield Token

Subtype

No asset of this subtype is currently listed on the Regen Atlas.

Definition: Yield tokens are financial innovation that merges yield instruments with environmental sustainability, enabling the packaging of varying risk-return profiles, such as interest from debt assets, Carbon Forwards, or staked green tokens.

Description

Yield refers to the return on an investment (rate payment), expressed as a percentage — i.e. the income generated from that investment over a specified period. Yields can take various forms, such as debt yield (income from lending) or staking yield (income from validating blocks or deposits). When packaged as a transferable unit, yields become assets. For example, yield derivatives, such as future yield contracts, are financial contracts whose value is derived from the expected future yield of an underlying asset or financial instrument. Another illustration are interest rate swaps (IRS): Instruments enabling the exchange of two yields (typically a fixed rate payment against a floating rate payment).

The difference between yield and output rights is subtle. Output rights relate to the rights on the product of an asset — e.g. rights on the revenues of fruits produced by the natural asset tree. Interest, on the contrary, is a utility of an asset. Put differently, yield is not what an asset produces, it is what an asset earns. For debt, yield is a payment for underwriting risk; for staking, yield is a payment for validating blocks.

Example

As far as we are aware, no green yield token exist at present. However, it is possible to speculate about some green yield tokens, which would provide an opportunity for portfolio diversification by batching assets with potentially different risk-return profiles. Concrete applications of green yield tokens may include the packaging of interests earned from Debt assets, other derivatives such as Carbon Forwards, or green crypto-assets with some sort of staking utility.