If a user would like to take on a position that gives them full exposure to the performance of the variable interest rate at the cost of their asset, they can do so by purchasing Yield Tokens.
Users who are looking to capitalize on the trading fees of these Yield Tokens can purchase or mint these Yield Tokens to provide liquidity for users to enter/exit these positions.
Element allows users to exit their Yield Token position by selling those assets into the AMM. This allows users to sell the accrued value of the Yield Tokens plus the current possible premium it is trading for in the market to recognized unearned interest ahead of time.
For users who want to hedge against the upcoming performance of the variable interest market, they can opt to sell their Yield Tokens and enter a non-speculative position.
For sophisticated traders who observe the discounted trading value of principal tokens and the premium trading value of yield tokens, they can take advantage of the gaps between these two traits by minting and trading.
Traders who want to enter and exit various fixed and variable yield rates can easily do so due to the two liquid markets Element provides for Principal and Yield Tokens. This allows users who change sentiments around the interest rate market to quickly enter a fixed rate market for hedging or the latter depending on how they feel the market outlook will be in the coming months or year.