Products / Principal Token
Introducing
Principal Token
A locally denominated token, backed by sovereign bonds.
Each token is backed by a Stablebond locked in an onchain vault, where the yield accrues. The token carries only the principal, worth 1.00 of its local currency, and moves to any wallet.
Principal TokenValue
1.00
In the local currency, in any wallet.
Yield
Accruing daily
On sovereign bonds in the vault, for the bondholder. That keeps the token at 1.00.
How it works
From a deposit to a fixed local balance, in one route
The same route runs in every Stablebond market. Only the local currency and the government bonds behind it change.
Inside the vault
Six parts, one flow
A bond carries two things: the principal you get back and the yield it earns along the way. A Principal Token separates them. These are the six steps, in the order the animation shows them.
Local currency in
Deposited through one API
A partner sends local currency into Etherfuse through the same API it uses for ramps and FX. Pesos in Mexico, reais in Brazil, tenge in Kazakhstan.
Stablebond
Short-dated sovereign debt, tokenized
Etherfuse turns the deposit into a Stablebond backed by short-dated government bonds in the same currency, such as CETES in Mexico. It earns treasury yield, so its value rises a little every day.
The vault
Locked. Still accruing.
The Stablebond goes into an onchain vault and keeps earning there. Tokens are minted only after a bond is deposited and burned before any bond leaves, so supply and reserves match one to one.
The yield
Stays with the bond
The yield keeps accruing to the Stablebond while it sits in the vault. It stays with the bond, never with the tokens that leave.
Principal Tokens
Fixed at 1.00. Goes anywhere.
What leaves the vault is the principal, as tokens worth 1.00 of the local currency. One MEXe is one Mexican peso, today and next month. The token earns no yield by design, so it holds its value in any wallet.
One vault, every token
The vault backs them all
No token is tied to a particular bond. The vault backs every token in circulation as one pool. Bring tokens back and the vault releases value against them, at 1.00 each.
Separating a bond's principal from its yield is an established practice. The US Treasury has offered it through STRIPS since 1985. Etherfuse brings the same split onchain, in local currency.
Use cases
Yield to unlock principal
Most solutions provide yield or fixed balances. The real solution needs both.
User rewards
The yield on user balances funds the rewards.
Rewards are credited at a fixed 1.00 in the user's own currency.
Local accounts
The float behind every balance keeps earning.
Users hold a fixed balance in each currency you serve, through one API.
Payroll float
Payroll funds keep earning until payday.
Employees receive tokens in the currency their rent is priced in.
Collateral and escrow
Funds locked for a contract keep earning while they wait.
The counterparty sees a balance fixed at 1.00.
Launching with
Two partners, two ways to use Principal Tokens
MEXeTala serves 12M+ customers across Kenya, Mexico, the Philippines and India. In Mexico it is testing MEXe as the balance behind its cashback program: customers earn through app engagement and loan repayment, and can put it toward their loans.
AirTM will be launching local-currency Principal Tokens across Latin America using the Etherfuse Principal Token engine. With many local currencies, each new currency will arrive as an update rather than a new application.
What’s next
A Principal Token for every Stablebond market
MEXe comes first. Each market Etherfuse lists gets its own token, named by country code and backed by that country’s Stablebond.
Mexican peso · CETES
Brazilian real · TESOURO
Kazakh tenge · MEKKAM
Philippine peso · PHTRY
Colombian peso · TES
Research Paper 02
The Missing Link
Beyond USD, Part II. Why local currencies need a fixed balance next to their safe asset, and how Principal Tokens provide it.
Coming soonBring a fixed local balance to your product
Tell us which markets and which use case you have in mind. We will come back with integration details and launch timing for your currencies.