PintoPinto: Leviathan-Free Low-Volatility Money
20 Nov 2024 “Nothing in the world is as soft and yielding as water. Yet for dissolving the hard and inflexible, nothing can surpass it. The soft overcomes the hard; the gentle overcomes the rigid. Everyone knows that is true, but few can put it into practice. Therefore the Master remains serene in the midst of sorrow. Evil cannot enter his heart. Because he has given up helping, he is people’s greatest help. True words seem paradoxical.” — Lao-tzu, Tao te Ching, Verse 78An Existential Threat“...
PintoHow to Get Yield Using Pinto. A Complete Guide
Where does the yield come from?Let’s answer the universal question first. Pinto is a low volatility money protocol designed to adapt to changes in demand by creating incentives that adjust its supply. When the supply of the Pinto token grows, new Pinto is distributed to participants. This is often referred to as seignorage. The Supply of Pinto grows when Pinto trades above its value target of $1. This occurs when demand for Pinto is greater than the supply of Pinto. 97% of newly minted Pinto ...
PintoBug Hunting, Number Crunching
I use data analytics to guide the Pinto experiment and have fun doing it. The year was 2022. Someone close introduced me to a “decentralized credit-based stablecoin protocol on Ethereum.” At the time, I did not know what any of these words meant, but the person described the Beanstalk project to me with great passion and excitement, having a strong confidence in the fundamentals of its economic model. Plus, I saw the field was offering a 50x return, so I was enticed to participate. Initially ...
Discontinued for 1) Pinto and 2) Pinto Community Blogs. 1: https://mirror.xyz/0x8F02813a0AC20affC2C7568e0CB9a7cE5288Ab27
PintoPinto: Leviathan-Free Low-Volatility Money
20 Nov 2024 “Nothing in the world is as soft and yielding as water. Yet for dissolving the hard and inflexible, nothing can surpass it. The soft overcomes the hard; the gentle overcomes the rigid. Everyone knows that is true, but few can put it into practice. Therefore the Master remains serene in the midst of sorrow. Evil cannot enter his heart. Because he has given up helping, he is people’s greatest help. True words seem paradoxical.” — Lao-tzu, Tao te Ching, Verse 78An Existential Threat“...
PintoHow to Get Yield Using Pinto. A Complete Guide
Where does the yield come from?Let’s answer the universal question first. Pinto is a low volatility money protocol designed to adapt to changes in demand by creating incentives that adjust its supply. When the supply of the Pinto token grows, new Pinto is distributed to participants. This is often referred to as seignorage. The Supply of Pinto grows when Pinto trades above its value target of $1. This occurs when demand for Pinto is greater than the supply of Pinto. 97% of newly minted Pinto ...
PintoBug Hunting, Number Crunching
I use data analytics to guide the Pinto experiment and have fun doing it. The year was 2022. Someone close introduced me to a “decentralized credit-based stablecoin protocol on Ethereum.” At the time, I did not know what any of these words meant, but the person described the Beanstalk project to me with great passion and excitement, having a strong confidence in the fundamentals of its economic model. Plus, I saw the field was offering a 50x return, so I was enticed to participate. Initially ...
Discontinued for 1) Pinto and 2) Pinto Community Blogs. 1: https://mirror.xyz/0x8F02813a0AC20affC2C7568e0CB9a7cE5288Ab27
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"Freedom is not the absence of commitments, but the ability to choose—and commit myself to—what is best for me."
– Paulo Coelho, The Zahir
Historically, one of the biggest impediments to Pinto (and Bean) utility has been the excessive volatility in the yield earned for continuously holding Pinto. During growth cycles, the return from Silo Deposits can be tremendous (e.g., 3 or 4 figure APYs); during periods without any growth, the APY can be at or near 0 for months on end. Such volatility in yield greatly limits the number of market participants willing to hold Pinto for extended periods of time.
Now, for the first time, thanks to the integration of the sPinto yield-bearing ERC-20 wrapper for Pinto Deposits with Spectra’s yield swapping protocol, users that are comfortable with volatile yield that comes in unevenly distributed spurts can lever up on the volatile yield they receive and simultaneously create a new opportunity for other market participants to “lock in” a fixed yield.
This integration opens up the market of potential holders of Pinto tremendously, and is the beginning of a new chapter for the Pinto experiment.
Spectra introduces the ability to split up sPinto into two tranches: (1) a fixed yield token, PT-sPinto, and (2) a variable yield token, YT-sPinto.
Principal Token
Principal Token (PT) allows users to earn a fixed yield (denominated in Pinto) for a predefined interval of time (i.e., until the pool closes). In the case of the initial sPinto Spectra integration, the pool will close 6 months after creation.
PT can be purchased at a discount to the Pinto Denominated Value (PDV) that can be redeemed at the time the pool closes for ownership of PT. Therefore, the cost of each PT at the time of purchase implies a fixed APY that will be earned over the term of the pool.
In practice, PT holders:
Redeem their PT for sPinto (not Pinto), based on the exchange rate between Pinto and sPinto;
Can redeem their PT for sPinto at anytime up until and even after the Spectra pool closes; and
Earn fixed yield continuously up until the pool closes or they redeem their PT for sPinto, and no yield thereafter.
Yield Token
Yield Token (YT) represents a variable yield token. In practice, YT ownership allows holders to access leverage on the yield being earned by sPinto by agreeing to pay a fixed yield to PT holders until the pool closes.
YT ownership allows holders to claim all remaining sPinto in the pool pro rata, based on YT ownership, after the requisite sPinto has been paid to PT holders after the duration of the pool elapses.
In practice, YT holders:
Redeem their YT for sPinto (not Pinto), based on the difference between the Pinto-denominated yield of sPinto and the fixed yield earned by PT during the duration of the pool;
Can redeem their YT for sPinto at anytime up until and even after the Spectra pool closes; and
Earn leverage on their sPinto yield continuously up until the pool closes or they redeem their YT for sPinto, and no leverage thereafter.
Fixed APY pricing
Any sPinto holder can simultaneously mint PT and YT, and then trade either side (for fixed or variable yield). Conversely, any holder of PT or YT can swap some of the PT or YT for the other in order to redeem sPinto from the pool. In both instances, the UX makes it feel as though users are swapping sPinto for PT or YT directly, and vice versa.
The fixed yield received for purchasing PT is determined by (1) the cost of the PT in Pinto relative to the number of Pinto that the PT will be redeemed for upon pool closure, and (2) the duration of the pool. The cost of the PT in sPinto, and therefore the fixed APY received, is a function of the Pinto:sPinto exchange rate, sPinto:PT-sPinto invariant and relative demand for PT and YT tokens.
Increased demand for PT relative to YT decreases PT supply in the Spectra pool, increasing its price and decreasing the fixed APY. Conversely, increased demand for YT relative to PT increases PT supply in the Spectra pool, decreasing its price and increasing the fixed APY.
The Spectra sPinto integration marks a new chapter in utility for Pinto and lays the groundwork for additional future utility.
Instant Utility
For the first time, there is a market price for expected yield from Pinto over a period of time.
Anyone expecting lower Pinto yields is incentivized to acquire PT. Anyone expecting more is incentivized to acquire YT. This allows the market to determine the expected future yield from Pinto exposure.
The ability to swap fixed and variable rates creates a whole new dimension of utility for Pinto holders. In addition to Pinto price exposure + Pinto variable yield, users can now choose:
Pinto price exposure + fixed Pinto yield; or
Pinto price exposure + leveraged variable Pinto yield.
Future Utility
The market price for fixed Pinto yield plots the first ever point on the Pinto yield curve, which shows market expectations of yield from holding Pinto over time, with time on the x axis and yield on the y axis. In practice, the date the pool expires is the x coordinate and Spectra PT fixed yield implied by the pool is the y coordinate.
In the future, additional Spectra sPinto pools can be created to plot additional points on the Pinto yield curve. A yield curve set by market expectations will serve as a tremendous datapoint for Pinto users to plan around for the future. The launch of the initial Spectra sPinto pool marks a pivotal step towards a Pinto-enabled Leviathan-free economy.
– ben weintraub
Links
Access the market on the Spectra UI.
How to use sPinto on Spectra: https://docs.pinto.money/spinto/trade-spinto-yield-on-spectra
How to use sPinto: https://docs.pinto.money/spinto/wrap-unwrap-spinto
"Freedom is not the absence of commitments, but the ability to choose—and commit myself to—what is best for me."
– Paulo Coelho, The Zahir
Historically, one of the biggest impediments to Pinto (and Bean) utility has been the excessive volatility in the yield earned for continuously holding Pinto. During growth cycles, the return from Silo Deposits can be tremendous (e.g., 3 or 4 figure APYs); during periods without any growth, the APY can be at or near 0 for months on end. Such volatility in yield greatly limits the number of market participants willing to hold Pinto for extended periods of time.
Now, for the first time, thanks to the integration of the sPinto yield-bearing ERC-20 wrapper for Pinto Deposits with Spectra’s yield swapping protocol, users that are comfortable with volatile yield that comes in unevenly distributed spurts can lever up on the volatile yield they receive and simultaneously create a new opportunity for other market participants to “lock in” a fixed yield.
This integration opens up the market of potential holders of Pinto tremendously, and is the beginning of a new chapter for the Pinto experiment.
Spectra introduces the ability to split up sPinto into two tranches: (1) a fixed yield token, PT-sPinto, and (2) a variable yield token, YT-sPinto.
Principal Token
Principal Token (PT) allows users to earn a fixed yield (denominated in Pinto) for a predefined interval of time (i.e., until the pool closes). In the case of the initial sPinto Spectra integration, the pool will close 6 months after creation.
PT can be purchased at a discount to the Pinto Denominated Value (PDV) that can be redeemed at the time the pool closes for ownership of PT. Therefore, the cost of each PT at the time of purchase implies a fixed APY that will be earned over the term of the pool.
In practice, PT holders:
Redeem their PT for sPinto (not Pinto), based on the exchange rate between Pinto and sPinto;
Can redeem their PT for sPinto at anytime up until and even after the Spectra pool closes; and
Earn fixed yield continuously up until the pool closes or they redeem their PT for sPinto, and no yield thereafter.
Yield Token
Yield Token (YT) represents a variable yield token. In practice, YT ownership allows holders to access leverage on the yield being earned by sPinto by agreeing to pay a fixed yield to PT holders until the pool closes.
YT ownership allows holders to claim all remaining sPinto in the pool pro rata, based on YT ownership, after the requisite sPinto has been paid to PT holders after the duration of the pool elapses.
In practice, YT holders:
Redeem their YT for sPinto (not Pinto), based on the difference between the Pinto-denominated yield of sPinto and the fixed yield earned by PT during the duration of the pool;
Can redeem their YT for sPinto at anytime up until and even after the Spectra pool closes; and
Earn leverage on their sPinto yield continuously up until the pool closes or they redeem their YT for sPinto, and no leverage thereafter.
Fixed APY pricing
Any sPinto holder can simultaneously mint PT and YT, and then trade either side (for fixed or variable yield). Conversely, any holder of PT or YT can swap some of the PT or YT for the other in order to redeem sPinto from the pool. In both instances, the UX makes it feel as though users are swapping sPinto for PT or YT directly, and vice versa.
The fixed yield received for purchasing PT is determined by (1) the cost of the PT in Pinto relative to the number of Pinto that the PT will be redeemed for upon pool closure, and (2) the duration of the pool. The cost of the PT in sPinto, and therefore the fixed APY received, is a function of the Pinto:sPinto exchange rate, sPinto:PT-sPinto invariant and relative demand for PT and YT tokens.
Increased demand for PT relative to YT decreases PT supply in the Spectra pool, increasing its price and decreasing the fixed APY. Conversely, increased demand for YT relative to PT increases PT supply in the Spectra pool, decreasing its price and increasing the fixed APY.
The Spectra sPinto integration marks a new chapter in utility for Pinto and lays the groundwork for additional future utility.
Instant Utility
For the first time, there is a market price for expected yield from Pinto over a period of time.
Anyone expecting lower Pinto yields is incentivized to acquire PT. Anyone expecting more is incentivized to acquire YT. This allows the market to determine the expected future yield from Pinto exposure.
The ability to swap fixed and variable rates creates a whole new dimension of utility for Pinto holders. In addition to Pinto price exposure + Pinto variable yield, users can now choose:
Pinto price exposure + fixed Pinto yield; or
Pinto price exposure + leveraged variable Pinto yield.
Future Utility
The market price for fixed Pinto yield plots the first ever point on the Pinto yield curve, which shows market expectations of yield from holding Pinto over time, with time on the x axis and yield on the y axis. In practice, the date the pool expires is the x coordinate and Spectra PT fixed yield implied by the pool is the y coordinate.
In the future, additional Spectra sPinto pools can be created to plot additional points on the Pinto yield curve. A yield curve set by market expectations will serve as a tremendous datapoint for Pinto users to plan around for the future. The launch of the initial Spectra sPinto pool marks a pivotal step towards a Pinto-enabled Leviathan-free economy.
– ben weintraub
Links
Access the market on the Spectra UI.
How to use sPinto on Spectra: https://docs.pinto.money/spinto/trade-spinto-yield-on-spectra
How to use sPinto: https://docs.pinto.money/spinto/wrap-unwrap-spinto
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