The Element Protocol, at its core, works by enabling users via the Ethereum contracts to split the base asset (ETH, BTC, USDC, DAI) of yield generating positions, such as a Yearn vault or an ETH2 validator, into two separate, fungible tokens: the Principal Token (PT), and the Yield Token (YT). One token represents the value of the base principal (called the Principal Token), and one token represents the variable interest gained from the yield generating protocol (called the Yield Token).