> For the complete documentation index, see [llms.txt](https://docs.aquaflux.pro/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.aquaflux.pro/the-primitives/tri-token-model.md).

# Tri-Token Model

One asset, three building bricks — mix & match your own risk-return profile.

AquaFlux’s Tri-Token Model re-imagines a single RWA bond as three dynamic, tradeable tokens.

### 1. First Glance

Imagine taking a single bond and snapping it apart into three LEGO bricks. Each brick does one job really well, and you can reassemble them in any combination to build exactly the investment you want.

That is the Tri-Token Model. AquaFlux takes a real-world asset (like a bond) and splits it into three tradeable tokens:

<mark style="color:blue;">P (Principal)</mark> · <mark style="color:purple;">C(Coupon)</mark> · <mark style="color:orange;">S (Shield)</mark>

<table><thead><tr><th width="110.66015625">Token</th><th width="459.7578125">Mechanism</th><th>Best For</th></tr></thead><tbody><tr><td><a href="/the-primitives/tri-token-model/p-token-principal.md"><strong>P-Token</strong></a></td><td><strong>Senior Tranche.</strong> Zero-coupon logic, buy it at a discount (say $0.94), get $1.00 back at maturity.</td><td>Treasuries, low-risk savers</td></tr><tr><td><a href="/the-primitives/tri-token-model/c-token-coupon.md"><strong>C-Token</strong></a></td><td><strong>Your income stream.</strong> Captures the underlying's interest payments. Sell anytime, no waiting for coupon dates.</td><td>Rate Traders, yield hunters</td></tr><tr><td><a href="/the-primitives/tri-token-model/s-token-shield-and-surplus.md"><strong>S-Token</strong></a></td><td><strong>Junior Tranche</strong>. Absorbs losses first, protecting P and C. In return, earns protocol fees, a share of coupons, and potential bonus rewards.</td><td>Risk-takers, yield maximizers</td></tr></tbody></table>

> By unbundling principal, income, and risk into separate tokens, every investor gets exactly the piece they want -- no more "one size fits all."

### 2. Why Split at All?

Traditional bonds bundle everything into one illiquid paper. By unbundling them, we unlock:

* 🔍 **Price Discovery:**&#x20;

&#x20;        The market can finally price "time value" (via P) and "risk" (via S) separately, instead of lumping everything into one number.

* 🧱 **Composability**:&#x20;

&#x20;       You can build cash-plus strategies or levered carry trades using DeFi legos.

* ⚡️ **Capital Efficiency**:&#x20;

&#x20;       Instead of locking up capital for the whole bond, you can hedge specific risks, provide targeted liquidity, or leverage just the piece you want.

### 3. Composable LEGO

Just like LEGO® bricks, **P, C, S** snap together in endless ways.\
Below are the most common “recipes” to spark ideas—mix, match, or automate them into something entirely new.

<table><thead><tr><th width="172.8515625">Recipe</th><th width="162.94921875">How to Build It</th><th width="223.23828125">Resulting Payoff</th><th>Ideal User</th></tr></thead><tbody><tr><td><strong>Classic Bond</strong></td><td><strong>P + C</strong></td><td>Principal + fixed coupons. Behaves exactly like the original bond.</td><td>TradFi funds, conservative DAOs</td></tr><tr><td><strong>Cash-Plus Reserve</strong></td><td><strong>P + S</strong></td><td>Capital-protected face value <em>plus</em> an extra spread from S-Token fees.</td><td>DAO treasuries, stable-coin treasurers</td></tr><tr><td><strong>Enhanced Yield Sleeve</strong></td><td><strong>C +  S</strong></td><td>Fixed coupons <em>plus</em> boosted APY from protocol fees; first-loss already sized.</td><td>Yield hunters, structured-product desks</td></tr><tr><td> <strong>Carry Trade</strong></td><td><strong>Long C, Short P</strong></td><td>Harvest coupons while shorting principal to lever yield or express a rates view.</td><td>Macro traders, hedge funds</td></tr><tr><td><strong>Risk-Parity Basket</strong></td><td>Allocate % weights in <strong>P/C/S</strong></td><td>Blend the three tokens into a custom risk budget (e.g., 70 % P, 20 % C, 10 % S).</td><td>Portfolio managers, robo-advisors</td></tr><tr><td><strong>...</strong></td><td></td><td></td><td></td></tr></tbody></table>

> **On-chain perks:** Every combo can be tokenized, LP’d, or used as collateral. This opens arbitrage loops simply impossible in TradFi.

***Three simple tokens, limitless combinations—finance that clicks together like LEGO®.***

### 4. Playground

We provide a playround on Pharos, [Play Now](https://playground.aquaflux.pro/) and get rewards!