Singapore, Singapore, July 16th, 2025, Chainwire
In an increasingly volatile decentralized finance (DeFi) environment, generating consistent and predictable yield remains a challenge for investors. Traditional DeFi strategies such as liquidity provision and lending, while lucrative during bullish market conditions, are typically subject to market fluctuations and lack predictability.
Excellion Finance, a DeFi hedge fund, in partnership with Arkis, a private credit platform, has implemented an investment strategy that delivered a net annual percentage rate (APR) of 32.6% over a 91-day period, using Principal Tokens (PTs) and private credit leverage, according to a recently published report.
Strategy Components
1. Fixed Yield Assets: Principal Tokens (PTs)
- Principal Tokens (PTs) are created through yield tokenization, a process that separates a yield-bearing asset into two distinct components (Principal Token (PT): Redeemable 1:1 for the underlying asset at maturity and Yield Token (YT): Provides exposure to the yield generated by the underlying asset and typically holds no value after maturity)
- PTs generally trade at a discount to the base asset, allowing holders to access a predefined, fixed yield if held until maturity. For example, a PT offering a 10% APR over a one-year term would, subject to the conditions of the offering, allow the holder to redeem the token at par value and realize the yield implied by the initial purchase discount.
2. Private Credit via Arkis
Arkis is a digital asset prime brokerage credit protocol for institutional borrowers and lenders to interact in a zero-trust environment. Arkis provides fixed-term credits to finance DeFi strategies with up to 5x leverage and accepts a wide range of collaterals. Using private credits from Arkis, Excellion significantly boosts income for investors and realizes complicated DeFi strategies with attractive yield opportunities.
Strategy Implementation: Leveraged PT Token Investment
Objective: Optimizing stable yield generation through leveraged exposure to fixed-rate principal tokens (PTs) offering predefined returns.
Execution Steps:
Strategy Execution Steps:
- Opportunity Identification: The strategy targeted eUSDe Principal Tokens (PTs), which were observed to offer an implied fixed APR typically ranging between 7% and 10%, based on prevailing market discount rates.
- Loan Agreement Structure: In a representative model, credit was structured via Arkis with terms that included up to 3x leverage and a 12% fixed borrowing rate. PTs were used as collateral within a smart contract framework operating on whitelisted protocols.
- Strategy Deployment: Borrowed capital was used to acquire additional eUSDe PTs, thereby increasing exposure to the fixed-yield position. The position was held over a 91-day term, during which performance and risk metrics were continuously monitored.
- Position Closure: At maturity, PTs were redeemed at par. The credit facility was repaid, and net returns were calculated based on the spread between the fixed yield earned and the borrowing costs.
The strategy, based on modeled assumptions, aimed to achieve a net annualized return (APR) of approximately 30.6% over a 91-day term. Modeled outcomes indicated relatively low volatility during the holding period. The return profile, if realized as projected, would compare favorably with yields reported in certain DeFi and fixed-income strategies over similar timeframes.
Risk Management Considerations
- Fixed Borrow Rate: Eliminates exposure to interest rate volatility and the risk of position liquidation.
- Asset-Backed Collateral: Yield-generating assets (PT tokens) are used as collateral.
- Maturity Lock: Yield predictability is maintained by holding PT tokens until maturity, in accordance with the terms of the fixed-rate structure.
- Counterparty Risk Mitigated: Arkis operates in a zero-trust institutional environment, minimizing credit risk. Credit is opened via a special smart-contract where borrowers can only trade with whitelisted tokens on whitelisted protocols.
The collaboration between Excellion Finance and Arkis represents an effort to explore structured strategies that apply fixed-yield instruments and private credit mechanisms within a DeFi context. The model is designed to enhance capital deployment efficiency and seek yield stability, potentially aligning more closely with fixed-income characteristics than traditional variable-rate DeFi strategies.
About Excellion Finance
Excellion Finance specialize in market-neutral crypto investment strategies designed to deliver consistent yield while minimizing risk. Their approach is built on institutional-grade security, robust risk management, and advanced trading strategies, ensuring stable and sustainable returns regardless of market conditions. To learn more, users can visit Excellion Finance.
Contact
CEO
Alexander Rubin
Excellion Finance
ceo@excellion.finance
