Fixed Rates
Lock in the current APR with Fixed Rates.
Last updated
Lock in the current APR with Fixed Rates.
Last updated
Lock in the current APR of the pool with Fixed Rate. First, we'll explain all elements visible on the drawer, followed by examples.
You may encounter various verbs that describe this action, such as fixing, locking in, or securing APR.
Here, you can convert your assets, such as USDC, into Principal Tokens (PT), which encapsulate a fixed yield until the end of the period.
The first box represents the underlying asset (here: USDC) and the platform (here: Morpho) on which the corresponding interest-bearing token (here: mUSDC) originates from
Maturity - Fix APR until this date
Max APR - The highest potential APR you can get until maturity. For this estimation, the app does not consider available liquidity.
Underneath, there is an input to enter the number of tokens to convert into Principal Tokens.
By default, the app displays the pool's underlying tokens, such as USDC or ETH. Alternatively, you can use the interest-bearing token from the token dropdown menu.
Principal Token is a derivative that encapsulates a fixed amount of underlying tokens, which you will be able to redeem in a 1:1 ratio at maturity.
In the bottom part of the Fixed Rates drawer, you will find a summary of your upcoming transaction:
In our example, we earlier provided 2000 USDC, and the summary shows that we will receive 2098 USDC-PT at 4.9%.
What does it mean?
First and foremost, we will receive 2098 PTs (directly to your wallet) for 2000 USDC today. At maturity, those PTs are redeemable 1:1 with underlying USDC. Profit at Maturity - extrapolates your fixed profit on this transaction.
Price Impact - refers to the change in an asset's price caused by your trade due to the liquidity and size of the trade relative to the market.
Fixed APR - it's the actual APR you'll earn on this transaction as it considers the amount of token you input against available liquidity, slippage, time to maturity, as well as protocol and pool fees.
Once you are familiar with the estimated outcome of this transaction, click [Secure Fixed Rate] to initiate it.
What are the main benefits of converting assets such as USDC or ETH into Principal Tokens?
Converting assets into Principal Tokens allows you to lock in the current APR for a fixed period until maturity. This can provide a hedge against APR volatility, ensuring that you receive a fixed return on your investment.
How does Cronox ensure 1:1 PT redemptions for underlying at maturity?
The value of Principal Tokens is maintained by the Cronox protocol locking in the corresponding amount of the underlying token, such as USDC, for each circulating PT. This ensures that PTs can be redeemed 1:1 with the underlying token at maturity.
Can I sell my PTs before maturity?
Yes, you can sell your PTs before maturity via Portfolio -> [Manage]. Note that the amount of underlying you receive will depend on the available liquidity at the time of the transaction. For redeeming PTs in full, it is necessary to wait until the PT's maturity.
Why is Fixed APR lower than Max APR?
The Fixed APR may be smaller than the Max APR due to several factors. It considers the number of tokens you input against the available liquidity, slippage, time until maturity, as well as protocol and pool fees. All of these factors could potentially decrease the Fixed APR from the potential Max APR.
However, this is not always the case, and the Fixed APR could be nearly the same as Max APR if the amount of underlying that you input is insignificant compared to the size of available liquidity.
Can I choose the maturity date?
No, users cannot choose the maturity date when using Fixed Rates. Maturity dates are set by liquidity providers when creating a pool. As a user, you can only choose from the variety of available pools and maturities on the Fixed Rates page.
What is the difference between converting an underlying and interest-bearing token?
If you already hold interest-bearing tokens (e.g., mUSDC/stETH) from underlying platforms such as Morpho or Lido, you can use them directly to purchase Principal Tokens. The Cronox app also allows you to get started directly with underlying (e.g., USDC/stETH) without the need to manually visit 3rd party platforms.
