KoinlyticsPendle takes any yield-bearing token (stETH, sUSDe, weETH, etc.) and splits it into two parts: PT (principal token) and YT (yield token). PT is like a zero-coupon bond; YT is a claim on the yield stream until maturity. This creates DeFi's first real fixed-income market.
PT: fixed yield
You buy PT-stETH at a discount to 1 stETH. At maturity, it redeems 1:1 for stETH. If PT trades at 0.94, you earn ~6% fixed yield until maturity. Zero exposure to variable yield changes.
YT: variable yield with leverage
YT-stETH earns whatever stETH yields until maturity, then goes to zero. Small upfront cost, magnified yield exposure. Speculating on yield going higher.
The AMM
Pendle's specialized AMM handles PT trades. It uses a curve that accounts for time-to-maturity, so pricing implicitly quotes yield.
Real use cases
- Fixed-rate lock-in. Yield feels high right now (say 30% on eETH). Buy PT-eETH and lock the current implied rate until maturity, immune to yield drops.
- Yield speculation. Believe stETH yield will rise? Buy YT-stETH cheaply, get magnified upside.
- Points farming. Many YT tokens earn multiples of point emissions from underlying (EigenLayer, Ethena, Symbiotic), letting farmers get more points per dollar than by holding the underlying.
Yield trading, done right
Pendle's product is DeFi's most sophisticated fixed-income primitive. Institutional desks arb PT prices vs traditional fixed-income yields; retail users buy PT for predictable returns.
Risks
- Smart contract risk (Pendle + underlying).
- Underlying depeg (stETH depeg would tank PT-stETH).
- Liquidity risk near maturity.