Use Cases & Examples
Discover a wider range of Spectra uses cases followed by practical scenarios.
By the end of this article, you will have a clearer understanding of Spectra's potential benefits and flexibility and how it could become an integral part of your DeFi strategy.
Fixed Rate
Lock in the APY of your yield-generating position, removing any uncertainty about future returns.
Aave: For instance, if you supply 1000 DAI into the Aave protocol at a 4% APY, there's no guarantee that the rate won't drop the next day, resulting in lower earnings than initially predicted.
Solution: Use Spectra's Fixed Rates tool to lock in that 4% rate for a specific period (e.g., 1 year).
✅ Even if Aave's DAI pool drops to 2% APY, you'll continue to earn at the initially fixed 4% rate for the remaining 1-year period. This means you could double your yield compared to users who deposited DAI at the same time but didn't lock in the rates.
Lido: Alternatively, suppose you hold 10 stETH with a current 5% staking rewards APY. With Spectra, you can lock in this rate for a defined period, such as six months.
✅ In this example, if the staking rewards APY decreases to 2.5%, you'll continue to earn at the initially fixed 5% rate for the next six months.
Discounted Assets (a different way to look at Principal Tokens)
Principal Tokens (PTs) are a product of yield tokenization, offering unique opportunities due to their discounted nature.
When using the Fixed Rates tool, users receive Principal Tokens—assets with zero-coupon bond mechanics that provide a fixed return at maturity.
Simplified Example: Using the Fixed Rates tool at a 7% APY with 1000 USDC will return 1070 PT-USDC. These 1070 PT-USDC represent a claim on 1070 USDC, e.g., one year from now. This can also be seen as buying USDC at a discount. Essentially, you are purchasing 1070 USDC for the current price of 1000 USDC, reflecting the fixed 7% return upon maturity.
Below is a rough representation of how the value of Principal Tokens develops against their underlying as they mature:
When utilizing the Fixed Rate tool, 1070 PT-USDC will be worth 1000 USDC.
Halfway to maturity, 1070 PT-USDC will be worth approximately 1035 USDC.
At maturity, 1070 PT-USDC will be redeemable for 1070 USDC.
Yield Trading
Morpho: If you believe the current 4% APY on the lending protocol's USDC market will rise due to market conditions, you can acquire YT-mUSDC (Morpho's interest-bearing token for USDC is mUSDC).
✅ If the implied APY increases, you are entitled to greater yield accrual than what you initially paid for those YTs.
Liquidity Provision
Providing liquidity in Spectra offers the opportunity to earn from various yield sources:
Pool's swap fees
The native yield of the interest-bearing token token
Principal Token's fixed rate yield
Spectra's native APW emissions to pools
Incentives provided by 3rd parties
✅ It's a yield-generating strategy that allows anyone to earn more yield on top of their interest-bearing tokens.
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