Primary & Secondary Liquidity
We support DeFi integrations through two liquidity mechanisms: a primary liquidity path implemented through native mint and redemption, and a secondary liquidity path implemented through venue-based trading (being added in partnership with a trading venue). This structure mirrors how liquidity is provided in traditional markets through mutual fund primary liquidity and ETF secondary liquidity, while remaining compatible with vault-specific redemption mechanics.
Primary Liquidity: Native Mint and Redemption
Every yToken is issued and redeemed through YieldFi’s native facility.
Mint (issuance): yTokens are minted when a user deposits the vault’s accepted deposit asset(s). The amount of yTokens minted is determined by the vault’s issuance logic and NAV reference at the time of processing.
Redeem: yTokens are redeemed when a user burns yTokens to receive the vault’s designated redeem asset. Redemption proceeds are determined by the vault’s redemption logic and NAV reference at the time of processing.
Primary mint/redemption functions as the canonical liquidity path for yTokens. It is the mechanism that anchors yToken valuation to the vault’s NAV methodology and provides a standardized entry/exit route across all vaults.
Secondary Liquidity: Trading Venue Liquidity (Coming Soon)
YieldFi is adding secondary liquidity for yTokens through partnerships with a trading venue.
Secondary liquidity is implemented as secondary market trading of yTokens, enabling holders to buy or sell yTokens on a venue without using the mint/redemption process for that transaction. This is particularly relevant for vaults that operate with 2+ day cooling periods, where secondary trading can provide an alternative path for users who prefer immediate liquidity rather than waiting for the redemption cycle.
Liquidity Model Used by DeFi Builders
For DeFi integrations—especially lending markets—liquidity is evaluated based on two properties:
the presence of a canonical exit route (primary mint/redemption), and
the availability of secondary trading (venue liquidity) where faster exits are required or preferred.
YieldFi’s model supports both properties without requiring YieldFi to maintain continuous AMM liquidity for each yToken.
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