TL;DR
- Spectra opened a new financial layer on Flare by separating an asset’s principal value from its future yield to enable income markets.
- The protocol already supports trading with sFLR and will add stXRP.
- The system splits each token into a Principal Token with fixed returns and a tradable Yield Token, giving users control between predictable income or variable exposure.
Spectra introduced a new financial layer on Flare by launching a yield-trading model that separates an asset’s principal value from its future cash flows.
Spectra already enables trading with sFLR and is preparing the arrival of stXRP, which will expand the list of income-generating assets on the network. This structure turns yield into a tradable component and creates instruments that did not previously exist natively on Flare.
How Spectra’s New System Works
The system divides each yield-bearing token into two parts. A Principal Token reflects the base value and grows to its full amount at maturity, allowing users to lock in fixed returns. A Yield Token concentrates the rights to future yield and is traded independently, giving room to hedge rate changes or take more aggressive positions. With this architecture, users decide between predictable income or exposure to rate movements.
Both tokens serve as modular components for other protocols on the network. Platforms such as Mystic or Morpho can use them for lending, collateral, or structured products, increasing the utility of tokenized yield and improving capital efficiency. Assets can move across applications and remain productive at all times.
Permissionless Model
Spectra adopted a permissionless framework. Any user can create yield-trading markets for sFLR, FAssets, or other tokens and collect swap fees in a structure similar to Uniswap. In this initial phase, the protocol operates a liquidity pool based on sFLR that supports the fixed-rate and yield-exposure markets. Liquidity providers maintain balanced exposure on both sides and receive swap fees, along with incentives such as rFLR or SPECTRA when activated by the protocol. The team’s priority is to deepen liquidity to reduce costs and provide more stable pricing for PTs and YTs.
The protocol also introduced a tool designed for users who want a straightforward entry point. The Fixed Rate module allows users to pay an initial amount and receive a higher amount at maturity, with a known rate from the start. A simple example is paying 1 to receive around 1.1, without needing to trade YTs or join liquidity pools. As users gain experience, they can move on to more advanced strategies such as yield speculation or liquidity provision.
The next expansion includes stXRP, Firelight’s liquid token. Its integration will broaden income-generation options and extend the reach of the tokenized-yield model within Flare
