GM!
What if you had the ability to both capitalize on and mitigate yield fluctuations? What if you could actively trade yields and employ hedging strategies to safeguard your portfolio?
Today, let us delve into @pendle_fi in redefining yield in #DeFi!
Disclaimer:
Kindly be advised that this thread is intended solely for the purpose of sharing information and should not be construed as financial advice.
Disclosure:
I am financially invested in @pendle_fi and its ecosystem.
Preparatory Reading:
For a more comprehensive understanding of the subject matter being discussed, we suggest acquainting yourself with the following topics through pre-reading
Table of Contents
🔹 What is Pendle?
🔹 Yield Tokenization and SY Token
🔹 PT and YT Token
🔹 @pendle_fi v2 AMM
🔹 Capital Efficiency and IL
🔹 Quick Reference
🔹 $vePENDLE
🔹 Pendle Flywheel
🔹 Pendle x #LSDfi
@pendle_fi is a yield derivative protocol that operates in a decentralized manner, enabling users to employ various yield management strategies.
Pendle unlocks the potential to utilize advanced yield strategies:
🔹Fixed yield
🔹Long yield
🔹Liquidity provision
Pendle utilizes a standardized API to wrap yield-bearing tokens in smart contracts, resulting in the creation of SY tokens.
These SY tokens enable effective yield management by distinguishing between the underlying principal (PT) and the asset's yield (YT)
PT token represents the yield-bearing asset's value.
It aligns with the underlying asset upon redemption, establishing its Fixed Yield. At maturity, it can be exchanged for the underlying asset at a 1:1 ratio. PT token can be acquired at a discount due to isolation of yield.
YT token represents the yield generated by a yield-bearing asset. Holding YT entitles users to receive the yield from the underlying asset.
Acquiring YT allows users to benefit from the asset's yield and earn profits when the received yield exceeds the cost of acquiring YT.
Pendle v2 AMM simplifies yield trading.
The AMM curve adapts based on the accumulated yield and improves capital efficiency during PT's maturity.
Pendle's pseudo-AMM, allows PT and YT flash swaps within one pool This results in capital efficiency and minimal IL
Pendle V2 AMM minimizes IL. The AMM curve adapts to align PT price with underlying value and reduce time-dependent IL.
The flexible AMM curve accommodates varying yield volatilities, enhancing liquidity and reducing slippage for large trade.
Here is a concise overview of @pendle_fi tokenized yield product.
Users are incentivized to lock $PENDLE tokens to acquire Vote-escrowed PENDLE ($vePENDLE).
$vePENDLE holders have the ability to vote on the distribution of rewards among various liquidity pools, rewards from protocol revenue and receive a share of swap fees.
Certain protocols (e.g.: @magpiexyz_io / @Penpiexyz_io and @Equilibriafi) have endeavored to leverage the benefits of $vePENDLE rewards distribution.
Their objective is to build a governance aggregator layer on top of @pendle_fi, thereby augmenting the demand for $PENDLE.
As @ethereum transitions to PoS, the #LSD market has experienced significant growth.
@pendle_fi capitalizes on this development by providing a yield management solution that harnesses the yield generated from staking rewards or LP of LSD tokens (LST) on DEX platforms.
References (Link in ALT)
Tagging #DeFi friends that loves @pendle_fi ecosystem
@blocmatesdotcom
@rektdiomedes
@ChadCaff
@0xTindorr
@Louround_
@jake_pahor
@CryptoShiro_
@SmallCapScience
@Flowslikeosmo
@stacy_muur
@defi_mochi
@Slappjakke
@crypto_linn
@Cryptotrissy
@Crypt0_Andrew
@ArbiAlpha
You can read the unrolled version of @pendle_fi thread here: typefully.com/eli5_defi/3EJKJdX