> For the complete documentation index, see [llms.txt](https://prodigyfi.gitbook.io/structured-yields/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://prodigyfi.gitbook.io/structured-yields/problem-and-solution.md).

# Problem & Solution

## Problem

#### Structured yield

Yield is one of the main reasons people come to DeFi, and structured yield is one of the most proven ways to earn it. You agree in advance to buy an asset lower or sell it higher, in return for a yield. Structured Derivatives have done this in traditional markets for decades, where funds, desks, and market makers use them to earn income on assets they already hold, at a price they are glad to trade at.

#### Where crypto falls short

Crypto has the same strategies, but they've been hard to reach. Most of this income still changes hands off-chain, through private OTC desks that demand large minimums and ask you to hand collateral to an intermediary you must trust to stay solvent. That puts real counterparty risk on you and keeps the market out of reach for most people.

On-chain attempts have not closed the gap either. They tend to be complex and built for professional traders, and not for the DeFi power users and the masses. Where this income does exist on-chain, it hands you a fixed menu: you take the protocol's price and its yield, and you can almost never name the price you'd actually trade at.

## Solution

Prodigy.Fi makes these strategies available on-chain, without an options account, an order book, or an off-chain counterparty. You name the price you'd buy or sell BTC or ETH at, and the protocol executes and settles the rest. You don't have to trade derivatives yourself.

All vaults are managed by smart contracts. Smart contracts ensure vaults remain fully collateralized for each trade, so neither side has to face solvency or credit risk. Settlement reads two independent oracles, Pyth Network and Chainlink. There's no leverage and no liquidation mechanism. 

Your yield is defined when you subscribe; the asset you hold at expiry is not. If the market reaches your price, your deposit converts into the other asset at that price. You keep the defined yield either way.

* You set the price. You name the level you'd buy or sell at.
* Defined yield, defined outcomes. You see the exact yield and your conversion price before you commit. Your capital is at risk: if the market reaches your price, your deposit converts at that price.
* Either side of the trade. Subscribe to a vault someone else created, or create your own and set its terms; the same contract works either side.
* Collateralized, non-custodial, on-chain. No leverage and no liquidation mechanism.