A financial instrument that pools cash-flowing assets (mortgages, auto loans, credit card receivables) into tradeable bonds. Investors buy into layered risk across an entire asset pool — not a single borrower. RWA tokenization is now bringing this structure on-chain for the first time.

<a href="/en/glossary/fixed-income/duration-matching/" target="_blank">Duration Matching</a> is an asset-liability management strategy: aligning the duration of your assets (bonds or RWA tokens you hold) as closely as possible with the duration of your liabilities (obligations you will need to meet in the future). When the durations match, changes in asset value and changes in the present value of liabilities roughly offset each other as interest rates move, making the overall financial position insensitive to rate shifts. In the RWA world, choosing between a 3-month or 10-year <a href="/en/glossary/fixed-income/tokenized-treasury/">Tokenized Treasury</a> is fundamentally a duration decision — get it wrong and your profit and loss diverges sharply from expectations when rates move.

A fixed income asset's price sensitivity to interest rate changes, measured by 'Duration.' The longer the duration, the greater the price impact from rate changes. Investors holding tokenized long-term bonds face <a href="/en/glossary/fixed-income/duration-risk/" target="_blank">Duration Risk</a> — price declines when rates rise. Investors holding tokenized short-term Treasuries (OUSG, USDY) have minimal duration risk, with yields directly tracking market interest rates.

The 'fair price' of a tokenized asset — total market value of underlying assets minus fees and liabilities, divided by total tokens in circulation to get the theoretical price per token. NAV is updated daily by issuers or oracles and is the basis for redemption calculations. NAV = $100 means each token can be redeemed for $100 of underlying assets; if the secondary market price is below NAV, it's called a 'discount.'

Principal Token (PT) and Yield Token (YT) are the products of Pendle Finance's "yield stripping" mechanism. The core: a yield-bearing RWA token (OUSG, sUSDe, BUIDL) is split into two independent tokens — PT represents "the right to receive the principal back at maturity" and YT represents "the right to all yield accumulated during the holding period." PT buyers purchase at a discount and redeem 1:1 for the underlying asset at maturity, effectively locking in a fixed annualized return (Fixed APY). YT buyers use a small capital outlay to gain leveraged exposure to all future yield from the underlying asset — a leveraged bet on floating yield. This mechanism enables a form of "interest rate swap" in the RWA context: one party locks in fixed yield (holds PT), the other bets on rising future rates for more floating yield (holds YT).

A party sells securities with an agreement to repurchase them at a predetermined higher price on a future date—economically equivalent to a short-term secured loan collateralized by securities.

Tokenizing the shares of a traditional money market fund (a fund holding short-term government bonds, commercial paper, and other highly liquid safe assets), allowing investors to hold money market fund yields in token form while enjoying 24/7 tradeability and DeFi integration. Representative products: Franklin BENJI, BlackRock BUIDL, Ondo OUSG.

Tokenizing non-publicly-traded credit instruments that traditional banks don't serve — SME loans, receivables, supply chain financing — allowing DeFi investors to directly act as lenders to these borrowing businesses, earning 8-14% annualized fixed rate yields. Representative protocols: Centrifuge, Goldfinch, Maple Finance. <a href="/en/glossary/fixed-income/tokenized-private-credit/" target="_blank">Tokenized Private Credit</a> is currently the highest-yielding but least liquid RWA category.

Tokenized representation of US Treasury bill holdings or money market fund shares, allowing holders to earn near risk-free yields within DeFi environments while maintaining on-chain composability and liquidity.

Stablecoins with underlying collateral in short-term government bonds or other yield-bearing assets, allowing holders to automatically earn underlying asset interest returns while maintaining near-$1 value. Unlike traditional stablecoins (USDC), yield-bearing stablecoins distribute interest income (previously kept by issuers) to token holders. Representative products: USDY (Ondo), USDM (Mountain Protocol), sDAI (Spark).