Excellion Finance, in collaboration with Arkis, has developed an investment strategy in a volatile decentralized finance (DeFi) environment, achieving a remarkable yield.
Key Components of the Strategy
The strategy involves the use of Principal Tokens (PTs) created via yield tokenization. PTs are split into two parts: Redeemable PT, which returns principal, and Yield Token, which provides exposure to yield. Private credit from Arkis is also used to enhance returns through leverage.
Strategy Implementation: Leveraged Token Investments
The strategy aims to optimize stable income through fixed-rate PTs. Key steps include identifying opportunities, structuring the loan agreement with PTs as collateral, applying borrowed capital to purchase additional PTs, and closing the position after 91 days.
Risk Management in the Strategy
Key risk management measures include a fixed borrowing rate to eliminate volatility, using assets as collateral, maintaining maturity to ensure yield predictability, and minimizing counterparty risks through Arkis' zero-trust model.
The cooperation between Excellion Finance and Arkis illustrates new pathways to structuring fixed-income strategies in DeFi, potentially improving income stability for investors.
