Pye Bonds
What Are Pye Bonds?
Pye Bonds are a novel staking primitive built on top of Solana’s native staking infrastructure. At their core, Pye Bonds are simply Solana stake accounts - but with added logic that transforms them into financial instruments with tradable characteristics.
Each bond represents a deposit of SOL into a validator’s stake account, wrapped with a timelock and a data structure that encodes the commercial terms of that stake. These terms include the validator's commitment to share a specific portion of staking rewards, as well as the maturity date at which the bond unlocks. The result is a portable, composable yield instrument that behaves like a tokenized fixed-income product.
How It Works
When a validator issues a Pye Bond:
- Stake Account Creation: A new stake account is created and delegated to the validator.
- Timelock Applied: The stake account is wrapped in a time-based lock, preventing early withdrawal until a defined maturity timestamp.
- Reward Split Logic: The bond includes a data structure that specifies how staking rewards are split between validator and the staker for that maturity.
- Tokenization: The bond is tokenized into two components:
- PT (Principal Token): Redeemable for the original staked SOL at maturity.
- YT (Yield Token): Entitles the holder to the staking yield accrued over the bond period.
By default, Pye Bonds represent variable yield since staking rewards depend on validator performance and Solana's inflation schedule. However, by splitting bonds into PT and YT tokens and enabling a secondary market, we create the conditions for a fixed-yield price discovery mechanism to emerge. The YT will trade based on forward-looking expectations of staking yield, enabling stakers to lock in a known return if they buy both the PT and YT upfront.
Key Features
- Built on Native Solana Staking: Uses existing stake account logic, so it inherits all the security and efficiency of the base layer.
- Timelocked Liquidity: Locks SOL for a defined period, enabling validators to offer higher rates in exchange for predictable capital.
- Reward Customization: Validators can define the share of rewards to offer, allowing market competition to shape attractive bond terms.
- Tokenized Yield Splits: Optional PT/ YT decomposition lets users trade principal and yield separately, unlocking fixed income strategies.
- Validator Composability: Bonds can be composed with jitoSOL or other LSTs, further enhancing validator economics.
Who Is It For?
- Validators: Pye Bonds give validators a way to secure longer-term stake and monetize it more effectively, especially when offering MEV or commission rebates.
- Stakers: Stakers can shop between bonds with different durations and reward terms, choosing the best-fit opportunity for their time horizon and risk tolerance.
- DeFi Builders: Protocols can integrate PT/ YT tokens into AMMs, lending markets, or structured products.
Why It Matters
Pye transform Solana's PoS into an efficient bond curve. In traditional markets, fixed-income products like Treasury Bonds provide a backbone of stability and yield curves. Pye Bonds bring similar market dynamics to crypto-native staking, enabling:
- Yield curve formation
- Price discovery of future staking rewards
- Validator differentiation via reward strategies
- New forms of DeFi composability
As the Solana ecosystem matures, demand for stable, predictable yield will grow. Pye Bonds provide the primitive to meet that demand, giving validators and stakers a better way to align incentives and unlock new economic potential from the base staking layer.
Next Steps
We’re gearing up for launch, Pye will initially support LST & validator deposits into bonds of 2 maturities in 2025 (1M, 3M).
If you’re a validator and would like to become a launch partner, please fill out this form and reach out to our BD team: @eash0x on Telegram.
Meantime, follow us on our official links: X/Twitter | Discord | Telegram