Market lifecycle

Before maturity: the live market

Every action in the protocol is available while the market is live:

• Deposit / withdraw. Turn USDC into SY or back again, at the current exchange rate. Always open, in both directions.
• Split. Lock SY with the protocol and receive equal amounts of PT and YT.
• Recombine. Return equal PT and YT and get the SY back. Split and recombine are exact opposites, and you can cycle between the two forms freely.
• Collect interest. YT holders collect what has built up so far, whenever they like. Collecting early matters: once collected, the interest is yours no matter what rates do afterwards.
• Trade. Swap between PT, SY and YT in the shared pool, or deposit into the pool as a liquidity provider and earn trading fees.

Throughout this phase, the exchange rate drifts upward as Blend interest comes in. PT’s price climbs toward one dollar, and YT’s remaining claim shrinks as the time window closes. In the background, the protocol keeps recording the exchange rate at every interaction. These recorded snapshots are called observations, and they decide what happens at the boundary, below.

At maturity: the rate freezes

Maturity is a timestamp fixed when the market is created. When it passes, the protocol freezes the redemption rate to the last observation recorded at or before the maturity instant, never to a reading taken afterwards. The freeze is what keeps the split clean at the boundary: interest that arrives after maturity belongs to nobody’s YT, so it must not sneak into anybody’s payout.

From that instant:

• PT pays out one-for-one. Each PT redeems for its dollar of principal, priced at the frozen rate. There is no deadline; redemption stays open.
• YT stops earning. Interest built up before the freeze can still be collected. The token itself is worthless from here on.
• Splitting stops. A matured market cannot create new PT or YT. There is no future interest left to separate.

After maturity: wind-down

The market becomes a settlement window: PT holders redeem, YT holders make their final collections, and liquidity providers withdraw. The current mainnet market is a single fixed cycle. When a successor market opens, moving into it means redeeming here and depositing there; nothing rolls over automatically.

The arc at a glance

The freeze mechanics (who records observations, what happens if none lands exactly at maturity, and why redemption can never read a post-maturity rate) are covered in Settlement and maturity.