Pendle is the first protocol that enables the trading of tokenized future yield on an AMM system. They aim to give holders of yield-generating assets the opportunity to generate additional yield and to lock in future yield upfront, while offering traders direct exposure to future yield streams, without the need for an underlying collateral.
The live Pendle price today is $1.17 USD with a 24-hour trading volume of $97,472.50 USD. Pendle is up 45.87% in the last 24 hours. The current CoinMarketCap ranking is #703, with a live market cap of $19,502,567 USD. It has a circulating supply of 16,702,875 PENDLE coins and a max. supply of 251,061,124 PENDLE coins.
Pendle is a protocol that enables the tokenization and trading of future yield. With the creation of a novel AMM that supports assets with time decay, Pendle gives users more control over future yield by providing optionality and opportunities for its utilization.
Holders of yield-generating assets deposit their yield-bearing tokens into Pendle in order to mint an Ownership Token (OT) and a Yield Token (YT). Users can then utilize their YT in two different ways.
Firstly, they can deposit their YT into Pendle’s AMMs to provide liquidity to Pendle. In return, fees and other incentives are given to these liquidity providers (LP).
Secondly, they can sell their YT for cash upfront, allowing them to fix the interest rates and lock in their returns immediately.
Traders will be able to buy these YTs directly, without the need to lock up their underlying assets. This is a more capital-efficient way for them to gain exposure to future yield.
Pendle aims to support numerous protocols and assets, allowing you holistic and effortless management of yield on a single platform.
You own your capital. On Pendle, you can deposit or withdraw as you please, without having to wait for contract maturation.
All transactions are handled by smart contracts and are verifiable. This means transparency and honesty between Pendle and you.
Powered by Pendle AMM
Existing AMM systems are not designed to support tokens with time decay, which would result in guaranteed losses for liquidity providers. Pendle features a novel AMM specially created to support these tokens in order to reduce these losses.
This section covers the basic features on Pendle with elaboration on how each of the features enable different exposures.
The mint function allows the tokenization of yield-bearing assets and is the fundamental entry point to Pendle. Users mint OT and YT by selecting an underlying asset and the desired expiry date. OT represents ownership of the underlying asset for a fixed period of time, and YT represents the future yield for the same period of time.
Pendle allows the swapping of YT and baseTokens to maximize yield and capital efficiency. The swap function utilizes the Pendle AMM. There are two different exposure strategies users can employ while swapping on Pendle.
Firstly, swapping YT for baseToken allows users to lock in the current yield and receive cash upfront. Secondly, swapping baseToken for YT allows users to gain exposure to future yield without having to lock in a capital-heavy asset.
Claiming Accrued Yield
Holders of YT have the right to future yield for as long as they own it. This yield is based on interest rates of the underlying. Yield accumulates as time passes and is usually awarded in the form of the underlying token, depending on the underlying protocol.
Pendle AMM also allows users to deposit token assets into the liquidity pools in exchange for swap fees and liquidity incentives. LPs will also receive PendleLP, which represents a proportional share of the pooled assets. It also allows users to reclaim the corresponding assets at any given time.
To allow owners to give up rights to their yield for a fixed period of time, users will deposit their yield token (aLINK for the purposes of this paper) into a smart contract. Two tokens will be issued, YT and OT.
Future Yield Token (YT)
Each YT token represents ownership of the future yield of the locked aLINK for a preset number of blocks. YT can be traded in the AMM, and the holder of the token receives aLINK yield as distributed by the base lending platform.
At expiry, YT tokens have a value of zero. The holder of OT can then roll his position into a new YT expiry date or redeem the underlying asset.
YT tokens differ from each other according to underlying asset and expiry date. Tokens with the same underlying asset and expiry are fungible.
Automated Market Maker (AMM) for Tokens with Time-Decay
While YT can be traded on existing Uniswap type AMMs, the constant product invariant formula x · y = k is not ideal for YT, where time is an additional factor. Utilizing a formula which is a pure function of reserves would cause pools to suffer from predictable losses to arbitrage as YT maturity approaches.
Taking inspiration from the constant product invariant and incorporating a constant decaying time factor, they have developed a strain of AMMs that can be utilized for tokens with time value.
Pendle native token will be utilized for governance. The landscape is changing rapidly and we see many innovations of value accrual. The team is committed but not limited to enabling the following token governance:
Allocation of liquidity incentives
Usage of treasury funds
Creation of new market pairs
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