Term premium,
locked at entry
Principal tokens bought at a discount and redeemed at par on a known date. The rate is locked at entry and reconciled against the oracle before purchase. A maturity ladder keeps capital returning every few weeks rather than in one block.
A principal token is a claim on one dollar at a known date, bought below par. The implied rate is the discount annualised over the days remaining, and it is fixed the moment the position opens. Subsequent market moves change the mark, not the outcome, provided the position is held.
Before purchase we recompute that rate from the protocol oracle and reconcile it against the advertised figure. A gap above 0.5 points ends the review. In practice fixed-rate venues reconcile well, which is why this book exists.
Maturities are laddered so capital returns every few weeks rather than in one block. The shortest rungs are the largest, which keeps the book adaptable and limits how far ahead any single judgement has to hold.
Principal tokens trade on a secondary market throughout their life. The lock is on the rate, not on the exit. Leaving early means taking market price instead of par.