Pendle

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Discover Pendle's fundamentals and latest news.

This content was generated by Whalee (BETA), an AI crypto assitant that analyses cryptocurrencies. Informations can be incomplete and/or erroneous. Please always double check and DYOR.

What is Pendle?

Pendle (PENDLE) is a decentralized finance (DeFi) protocol that allows users to tokenize and trade future yields on their DeFi assets. It splits yield-bearing assets into principal tokens (PT) and yield tokens (YT), enabling users to execute various yield management strategies such as fixed yield, long yield, and hedging against yield downturns. Pendle operates on multiple blockchain networks, including Ethereum, Arbitrum, and BNB Chain, and has a utility token, PENDLE, which enhances liquidity and provides governance rights when locked as vePENDLE.

How is Pendle used?

Pendle (PENDLE) is a decentralized finance (DeFi) protocol that allows users to trade and manage future yields on various assets. Here's how it works:

  1. Tokenization of Yield: Pendle splits yield-generating tokens into two parts: Ownership Tokens (OT) and Future Yield Tokens (YT). OT represents ownership of the underlying asset, while YT represents the future yield of the asset.

  2. Trading and Yield Management: Users can trade these tokens, allowing them to sell YT for immediate income or buy it to gain exposure to the yield of the underlying asset. This enables strategies like longing and shorting, providing opportunities for diversification and capitalizing on potential yield movements.

  3. Liquidity Provision: Users can also provide liquidity to Pendle and earn additional yield. This liquidity provision is crucial for the smooth functioning of the platform.

  1. Yield Optimization and Hedging: Pendle serves as a tool for yield optimization and hedging, allowing users to manage their yields more effectively. As the protocol continues to develop and integrate with other platforms, it may offer more opportunities for yield-related trading and investment strategies.

  2. Governance and Staking: The native token, PENDLE, is used for governance and staking within the platform. This ensures that users have a say in the direction of the protocol and can participate in staking to earn rewards.

Overall, Pendle provides a unique platform for users to manage and trade future yields, offering a range of benefits and opportunities for yield optimization and diversification.

How do I store Pendle?

To store Pendle (PENDLE) tokens, you can use various methods:

  1. DappRadar Wallet: Set up a compatible wallet on DappRadar to receive and manage your Pendle tokens securely.

  2. BYDFi Wallet: Store your Pendle tokens in your BYDFi account, which acts as a custodian for your assets. You can also withdraw to a decentralized wallet for more control.

  3. Metamask Wallet: Use Metamask, which supports millions of assets and blockchains, to store and trade your Pendle tokens on decentralized exchanges.

  1. KuCoin Wallet: Hold your Pendle tokens in your KuCoin account or transfer them to non-custodial wallets for added security.

  2. Trust Wallet: Add Pendle tokens to your Trust Wallet by using the custom token feature, selecting the Ethereum network, and pasting the contract address.

These options provide flexibility and security for managing your Pendle tokens.

How to buy Pendle?

To buy Pendle (PENDLE) tokens, follow these steps:

Buying Pendle (PENDLE) on Centralized Exchanges (CEX)
  1. Register and Verify an Account:

    • Create an account on a centralized exchange (CEX) like Binance, Coinbase, or KuCoin.
    • Verify your identity by providing necessary documents and enabling two-factor authentication for security.
  2. Fund Your Account:

    • Deposit fiat currency using methods like credit/debit cards, bank transfers, or third-party payment services.
    • Buy a supported cryptocurrency like USDT, ETH, or BNB using your deposited fiat.
  3. Buy Pendle (PENDLE):

  • Navigate to the spot market and select the trading pair for Pendle (e.g., PENDLE/USDT).
  • Choose your order type (market, limit, stop, etc.) and set the amount you want to buy.
  • Confirm your purchase and wait for the transaction to complete.
Buying Pendle (PENDLE) on Decentralized Exchanges (DEX)
  1. Set Up a Crypto Wallet:

    • Download and install a Web3 wallet like Metamask or Trust Wallet.
    • Create and set up a new wallet, ensuring you have the necessary cryptocurrencies like ETH or BNB.
  2. Transfer Funds to Your Wallet:

    • Transfer the required cryptocurrency (e.g., ETH) from your CEX account to your self-custody wallet address.
  3. Connect to the DEX:

  • Go to the DEX platform and connect your wallet by clicking "Connect Wallet" and following the instructions.
  1. Swap for Pendle (PENDLE):
    • Select the "Swap" option and choose the token you want to trade from (e.g., ETH) and Pendle (PENDLE) as the "To" currency.
    • Set the amount and confirm the swap. Your wallet will ask you to confirm the action.
Additional Tips
  • Always research the exchange and its fees before making a purchase.
  • Be cautious of scams and ensure you are using the correct contract address for Pendle (PENDLE).
  • Consider storing your Pendle tokens in a secure, non-custodial wallet for long-term holding.
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History of Pendle

Pendle, a decentralized finance (DeFi) protocol, was initially introduced in November 2020 under the name "Benchmark." It was co-founded by TN Lee, Vu Nguyen, GT, and YK. The platform was later rebranded as Pendle and officially launched in July 2021.

Pendle is built on the Ethereum blockchain and allows users to trade, yield farm, and provide liquidity for tokenized yield assets. The protocol's native token is PENDLE, used for governance and staking within the platform.

In September 2021, Pendle raised $3.5 million in a funding round led by Mechanism Capital, which was used to further develop the protocol and expand its user base. This was followed by the launch of Pendle V2 in October 2021, introducing new features such as multi-collateral pools and an improved user interface.

Since its launch, Pendle has continued to grow in popularity, with a total value locked (TVL) of over $200 million as of May 2023. The platform has formed partnerships with other leading DeFi protocols, such as Aave and Curve, to expand its reach and offer users more options for yield farming and liquidity provision.

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How Pendle works

Pendle Finance is a decentralized yield trading protocol that operates on the Ethereum blockchain. It allows users to tokenize and trade future yields from yield-bearing assets, such as Aave and Compound, by splitting them into two tokens: Principal Tokens (PT) and Yield Tokens (YT). This tokenization enables users to manage their assets more flexibly and engage in various yield strategies.

Tokenization Process
  1. Deposit Assets: Users deposit their yield-generating assets, such as aTokens from Aave, into Pendle.
  2. Token Minting: Pendle mints two tokens:
    • Principal Token (PT): Represents a claim to the deposited principal and can be redeemed for the full underlying asset at maturity.
    • Yield Token (YT): Represents a claim to the future yield generated by the underlying asset until maturity. After maturity, YT holds no value.
Yield Trading
  1. Trading YT: Users can trade YT tokens to gain exposure to future yields without having to post their own assets as collateral on another protocol.
  2. Liquidity Provision: Users can provide liquidity to Pendle's AMM by pairing YT with the underlying asset. This earns them additional trading fees and protocol rewards.
  3. Interest Rate Swaps: YT holders can sell their tokens to immediately lock in returns at a fixed interest rate, simulating a traditional interest rate swap.
Pendle's AMM

Pendle's Automated Market Maker (AMM) is designed specifically for time-decaying assets like YT. It adjusts the AMM curve at each timestep to accurately price time-sensitive assets, preventing mispricing and ensuring liquidity pools remain robust.

Governance and Rewards
  1. vePENDLE: Users can lock up PENDLE tokens to receive vote-escrowed PENDLE (vePENDLE), which carries voting and economic power.
  2. Voting and Rewards: vePENDLE holders govern the platform, earning rewards from 3% of all yield accrued by YT. Holding vePENDLE enhances rewards by up to 250%, promoting decentralization and rewarding loyal community members.
Key Features
  • Time-Decaying AMM: Pendle's AMM accounts for time decay, optimizing capital and preventing potential financial losses due to mispriced assets.
  • Tokenization: Pendle tokenizes future yields, allowing users to trade and manage their assets more flexibly.
  • Governance: vePENDLE holders govern the platform, ensuring community involvement in decision-making.
Security and Audits

Pendle's codebase has been fully audited by reputable auditors, and all flaws have been addressed. The platform is open-source, allowing anyone to monitor the codebase and flag potential issues.

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Pendle's strengths

Pendle (PENDLE) has several strengths that make it a unique and valuable platform in the decentralized finance (DeFi) space:

  1. Tokenization and Trading of Future Yield: Pendle allows users to tokenize and trade future yields, providing a new layer of flexibility in managing yield income. This enables investors to optimize their returns by trading future yields based on their market outlook and risk appetite.

  2. Advanced Yield Management: The platform offers advanced yield management strategies, including fixed yield, long yield, and hedging against yield volatility. This allows users to maximize their returns in various market conditions.

  3. Risk Management: Pendle provides real-time risk metrics and historical data to help users make informed decisions about their investments. These metrics include historical volatility, asset correlation, liquidity depth, and collateralization ratio, ensuring transparency and informed decision-making.

  1. Governance Participation: PENDLE token holders can participate in the platform's governance process, voting on proposals related to platform upgrades, parameter settings, and other key decisions. This ensures that users have a direct say in the future direction of the platform.

  2. Flexibility and Accessibility: Pendle's liquidity provision feature offers flexibility, allowing users to choose which pools to provide liquidity to based on their risk tolerance, investment goals, and market conditions. Additionally, the platform provides educational resources to help users understand risk metrics and make better investment decisions.

  3. Security and Transparency: Pendle conducts regular audits and provides detailed information about the risks and rewards of using the platform, ensuring a secure and transparent environment for users.

These strengths make Pendle a pioneering protocol that enhances the functionality and accessibility of financial services in the blockchain space.

Pendle's risks

Pendle (PENDLE) carries several risks that investors should be aware of:

  1. Volatility Risks: The cryptocurrency market is highly volatile, and prices can fluctuate rapidly. This volatility can result in significant losses if not managed properly.

  2. Protocol Hacking and Withdrawal Risks: As with any decentralized platform, there is a risk of protocol hacking and the withdrawal of funds from pools. Additionally, hacking the Pendle web interface can also be a concern.

  3. Impermanent Loss Risks: When providing liquidity, users are exposed to impermanent loss risks. However, if they hold the liquidity tokens until maturity, this risk is mitigated.

  1. Composability Risks: Pendle's automated market maker (AMM) model integrates with other protocols like Aura and Balancer, which can lead to composability risks. If there are any issues with these integrated protocols, it can affect Pendle's liquidity pools.

  2. Smart Contract Risks: There is a risk associated with the smart contracts and systems deployed by third-party protocols that Pendle interacts with.

  3. Yield Token Risks: The value of yield tokens (YT) can collapse, resulting in significant losses if users are unable to redeem their tokens at the expected rate.

  1. Liquidity Risks: Users can lose a portion of their investment if the rate of liquidity tokens (LP) collapses.

  2. Governance Risks: The governance system, vePENDLE, can be affected by the actions of token holders, which may impact the protocol's functionality and token value.

These risks highlight the importance of thorough research and due diligence before investing in Pendle Finance.

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Did Pendle raise funds?

Yes, Pendle (PENDLE) has raised funds through several funding rounds. Here are the details:

  • Strategic Funding Round (April 16, 2021): Pendle raised $3.7 million in a private funding round led by Mechanism Capital. Other contributors included Crypto.com Capital, Hashkey Capital, Spartan Group, imToken, DeFi Alliance, LedgerPrime, and several others.

  • Strategic Funding Round (August 23, 2023): Pendle had another strategic funding round, but the details of this round are not disclosed.

These funding rounds have contributed to Pendle's overall financing, which totals $3.7 million. The investors involved in these rounds include Mechanism Capital, Crypto.com Capital, Hashkey Capital, Spartan Group, imToken, DeFi Alliance, LedgerPrime, and others.

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Pendle’s team

  • TN Lee: Co-founder and CEO of Pendle Finance.
  • Vu Nguyen: Co-founder of Pendle Finance.
  • GT: Pseudo-anonymous team member.
  • YK: Pseudo-anonymous team member.
  • Dan Anthony: Part of the team, mentioned as a co-founder alongside TN Lee.
  • Long Vuong Hoang: Co-founder.
  • Kevin Tseng: Head of Institutional at Pendle.
  • Anton Buenavista: Employee at Pendle.
  • Ken Chia: Employee at Pendle.
  • Paolo Luis Dioquino: Employee at Pendle.

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