> For the complete documentation index, see [llms.txt](https://docs.yield.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.yield.fi/defi-integration/primary-and-secondary-liquidity.md).

# 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:

1. the presence of a **canonical exit route** (primary mint/redemption), and
2. 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.