Zero-Coupon Bond
A zero-coupon bond is a bond that pays no periodic interest and is instead sold below its face value, returning full face value at maturity. The gap between the discounted purchase price and face value is the investor’s entire fixed return. A Principal Token is the on-chain equivalent of a zero-coupon bond.
A zero-coupon bond makes no interest payments during its life. You buy it at a discount and redeem it at par (face value) on the maturity date; the difference is your locked-in yield.
Spield’s Principal Token works exactly this way: buy it below par, hold to maturity, redeem 1:1. Understanding zero-coupon bonds is the fastest way to understand PTs.