Pendle Finance
Tokenization of future yields — fixed interest rate and yield trading in DeFi.
Pendle Finance is a DeFi protocol tokenizing future yields — enabling fixed interest rates and yield trading without underlying asset exposure.
How it works:
•Yield-bearing asset (e.g. stETH) is deposited
•Pendle splits into two tokens:
- PT (Principal Token) — "zero coupon bond"
- YT (Yield Token) — right to future yields
PT token:
•Buy PT at discount
•At expiry: PT = 1:1 underlying
•Fixed interest rate until expiry
•Example: PT-stETH Jun 2025 at 0.94 ETH → 6.4% APY fixed
YT token:
•Receive all accumulated yields until expiry
•Speculation on APY increase
•If APY is higher than expected → YT profitable
Pendle AMM:
•Special AMM for PT/YT trading
•Liquidity provided by LPs
•PENDLE token for governance
Strategies:
•"Fixed yield": buy PT → guaranteed return until expiry
•"Long yield": buy YT → benefit if APY rises
•"Yield LP": provide liquidity → trading fees + PENDLE rewards
Where to use:
•ETH staking (stETH, wstETH)
•Ethena USDe (high sUSDe APY)
•Swell swETH, rsETH...
Risks:
•Smart contract risk
•Underlying asset risk (stETH depeg)
•YT can become worthless at expiry