Pendle Finance

The blockchain and DeFi universe have never failed to amaze us. Pendle Finance is one of the great examples, which is the first DeFi yield tokenization protocol.

Pendle introduces the concept of token splitting, which enables users to make two parts of the token. After which, they can use either part as they prefer.

Resultantly, it creates a permissionless ecosystem, which increases the control and makes the protocol versatile.

So, how does it happen? What is it all about, and is Pendle worth investing in the future? Let’s learn all about it, together!

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Overview of Pendle Finance

Pendle Finance is the new entry in the global crypto market which targets yield swaps and assists futures trading.

It focuses on splitting the principle and yielding maximum control and benefit from the bond as the holder desires.

Three elements combine to create the whole network, i.e., Pendle AMM, Yield Tokenization, and vePENDLE. We’ve explained them all down below.

Regarding its trading assistance aspect, it enables the holders to benefit from yield-generating assets to lock their assets and withdraw before the expiration date.

Combining these factors with its cross-chain compatibility, holders can get maximum yield on bonds and trades.

Origins of Pendle Finance

The platform was launched in June 2021 by a group of anonymous individuals. They have used pseudonyms of TN Lee, Vu, Yk, and GT. And it seems like the crypto projects launched by anonymous individuals are highly appealing to investors (looking at you, Bitcoin).

It is because Pendle Finance soon gained the attention of platforms like Bitscale Capital, Binance Lab, Crypto.com Capital, Spartan, and 250+ Altcoins Capitals.

Within a short duration, it raised a whopping amount of $3.7 million in funds from these investors.

Anyways, the platform is originally based on Ethereum Blockchain, but you can make transactions on other networks too, like Arbitrum, Optimism, and BNB Chain. Its headquarters is in South Korea.

Unique Yield Tokenization Mechanism

The first component of Pendle Finance, which sets the network apart from others is Yield Tokenization. It makes the platform a permissionless DeFi protocol as the holders get more control over the tokens and profit-generating assets.

The whole process is divided into two phases.

SY (Standardized Yield Tokens)

In the first phase, the protocol wraps the yield-bearing tokens into a standardized API. The implemented API penetrates the token and opens them up for Pendle’s yield-tokenization process to facilitate splitting. As a result, it enables the permissionless part and prepares the tokens for minting.

The process happens automatically, but you can undo it (wrap/unwrap) from the SY Unwrapper located at the top right corner.

Minting

Next comes the minting process, which splits the tokens into two components. The primary process has not been revealed yet.

However, the split parts are the Principle Tokens and Yield Tokens. The users can manage, trade, or store both components of their underlying yield-bearing asset separately.

PT (Principle Tokens)

Principle tokens are the principal part at the holder’s disposal. From the PT, some users utilize its small portion to benefit from the entire bond after maturity.

YT (Yield Tokens)

Yield tokens are the yield part that offers yield to the holder. Some users utilize this component to cash out the profit before maturity.

Since these tokens are also SY, you can unwrap them back into the underlying asset via SY Unwrapper.

Tokenomics of Pendle Finance

A crypto platform or network is incomplete without its native token. This platform also has its native token under the same name, PENDLE.

The token is built on the ERC-20 protocol, where its total supply is more than 231 million tokens. However, only 97 million tokens are in circulation.

PENDLE token is one of the pioneers of LRTfi (Liquid Restaking Token finance). This DeFi field allows the users to liquefy the staked assets via LRTs (Liquid Restaking Tokens). Hence, it supports protocol management, providing more governance to the system.

Besides the 65.1% in circulation, 19.2% is reserved for ecosystem funds, while 10% is reserved for incentives. Only the 5.7% is allotted to the pool. But there’s a support token for PENDLE.

vePENDLE

The value of Pendle Finance decentralization increases with its vote-escrowed PENDLE, or simply vePENDLE. It allows the PENDLE holders to access the token’s utility features.

Moreover, the holders can also use it as a sink to reduce PENDLE supply and increase its stability. You can receive vePENDLE by locking your current PENDLE tokens.

However, you have to be careful since vePENDLE decays over time and ends up when the lock duration completes. At this stage, your PENDLE tokens unlock.

Pendle’s Automated Market Maker (AMM)

After a year of its launch, Pendle Finance released its Automated Market Maker (AMM) model which was inspired by Notional Finance. It is designed to benefit trading yield and profits from PT and YT.

What makes Pendle’s AMM unique is its time-decaying mechanism, enabling traders to claim fixed yield and avoid financial losses. Since the platform divides assets into two tokens, AMM’s profit is more beneficial for PT holders and increases their capital efficiency upon maturity.

How Does it Work?

Whether you are buying or selling yield tokens, the swap contracts follow a similar process. Here’s what happens when you buy YT.

1. You send SY to swap contract, which withdraws additional SY from the AMM pool
2. It mints all SY into PT and YT.
3. The YTs are sent to you, while the PTs are sent back to the pool

In contrast, you want to sell YT;

1. You send YT to the swap contract, which takes the equal PT from the pool.
2. The contract combines PT and YT into SY.
3. SY, equivalent to your sold YT is sent back to you (or in the form of other tokens, like ETH, BTC, USDC). The remaining SYs are submitted to the pool.

Due to this innovative AMM model, Pendle offers multiple benefits, such as low impermanent loss (IL) and high capital efficiency. It also allows customization to maximize yield according to predicted volatilities.

Acquiring PENDLE Tokens

Purchasing PENDLE tokens is not hard since it has gained quite popularity as is available on various platforms. You can purchase PENDLE on over 37 crypto exchanges including Binance, MEXC, ByBit, KuCoin, Uniswap, and others.

While the purchasing steps may vary from platform to platform, they more or less follow the same procedure, mentioned below:

1. Select a crypto exchange through which you want to purchase PENDLE tokens, and create an account. Ensure they have PENDLE listed on their coin’s list before registration.
2. Next, you need enough funds to purchase the desired amount of tokens. For this purpose, connect your bank account or withdraw funds from your other wallet. Luckily, most exchanges also allow you to fill the balance with cryptocurrencies, which you can exchange with other tokens (like Pendle’s).
3. After you have enough balance, go to the platform’s ‘Buy Crypto’ section.
4. Search for the PENDLE token from the crypto coin’s list.
5. Here, you may have different purchase options, based on the platform’s offerings. You can either purchase tokens directly through your credit or debit card, use your platform’s wallet to exchange tokens or purchase them from other users via P2P trading.
6. After selecting the step, follow the prompts that your platform will provide. For example, if you are using the loaded balance, select the fiat currency or crypto coin in the sell section and PENDLE in the buy.
7. Click Exchange, and the tokens will transfer to your wallet in a short time.
8. Here, you can either keep the tokens in the platform’s native wallet or transfer them to an external storage, the choice is yours.

On each exchange, you will find common trading pairs for PENDLE purchases. These range from fiat currencies, like USD, BRL, and EUR, to crypto coins, such as BTC, ETH, USDT, USDC, etc.

Governance Structure in Pendle Finance

To understand the governance structure, let’s return to vePENDLE which determines this model. To bring power to vePENDLE holders, Pendle Finance uses an incentive channeling mechanism to increase governance.

In this structure, the holders vote for the pool rewards and determine their flow. As a result, they encourage others to vote for the same pool they already voted for, increasing its value. The higher you direct your vePENDLE value to a pool, the more supportive votes it will get.

The vePENDLE holders have multiple benefits as well. First, the YT’s and matured PT’s interest rewards determined these holder’s base APY. Then they also receive 80% of the swap fees from voted pools.

Moreover, Pendle takes 3% of the yield of all yield tokens as a fee. But all of this fee is sent to vePENDLE holders, and the platform receives nothing. However, this distribution is bound to change in the future.

Security Measures and Protocol Audits

Pendle Finance has practiced high-security standards to ensure holders’ and traders’ safety.

It is evident that the platform has never been hacked since it started operation. Although they suffered from a security breach in their X (formerly Twitter) account on March 30, their platform is still untouched.

On the other hand, six trusted auditors audit their reports, including Dingbats, Ackee, Cmichel, Dedaub, and others. As a result, a large community trusts the network, which is evident from their Total Value Locked (TVL). Its value is almost 4.67 billion USD and 67.99 thousand BTC.

Pendle’s Position in DeFi and Future Outlook

Being the first DeFi yield protocol and tokenized futures trading platform, Pendle Finance has a high potential in the decentralized world.

Its TVL reaching billions of dollars is proof enough that people are taking the token as a great prospect.

Hence, with efficient and more controllable futures trading, token splitting, and a unique AMM mechanism, Pendle seems to have a bright future.

As the protocol is expanding, it is also collaborating with multiple other platforms for a more impactful dominance.

Conclusion

Pendle Finance has revolutionized the yield tokenization landscape with its AMM and vePENDLE. Its token splitting encourages traders and investors by giving them more control and choices to decide with principle and yield.

On the other hand, the high tokenomics and impressive governance vePENDLE model have raised the bar as well. So overall, the protocol has made an excellent start, considering it was launched just in June 2021.

Now, it’s a matter of time to see how well the platform manages this successful beginning. Besides that, Pendle’s future looks promising.

We Coin-Labs.com provides only objective information about Pendle Finance.
Therefore, we are not responsible for the investment decision in Pendle Finance and the resulting loss.

Pendle Finance Basics

Here are some factors that investors should consider before investing in Pendle Finance.

Cryptocurrency Features	Pendle Finance (PENDLE)
Publisher or Developers	Pendle
Headquarters (Registration Number)
Symbol	PENDLE
Platform
Published Date (CMC Registration)	2024-11-01
Max Supply	No limit

Reliability Score of Pendle Finance in 2024

These are indexes mesuring the investment reliability of Pendle Finance conducted by Coin-Labs.com.

Investment Reliability Rating Items	Scores and Current Status
Company Activation Rate	/ 10.0 CAR
Communication Rate	/ 10.0 CR
Technology Transparency Rate	/ 10.0 TTR
Development Participation Rate	/ 10.0 DPR
Listing Status on the World's Top 10 Exchanges	Listed on 5 Exchanges
Number of Available Pairs Worldwide	386 Pairs
Market Cap of the Cryptocurrency	758,143,022 USD (Rank #83)

The table above shows the result of investment suitability evaluation for Pendle Finance.
Check out how we evaluate cryptocurrencies on the crypto rating description page.

Pendle Finance Price

Here are the price and recent trading volume of Pendle Finance. (Data of 2024-11-02 00:35:00)

Price Items	Price and Trading Volume of Pendle Finance
Pendle Finance Price	4.853 USD
Price Change 24h	0.49%
Price Change 7d	4.59%
Trading Volume 24h	79,769,258 USD
Trading Volume Change 24h	-8.44%

Cryptocurrency Metadata

You can check the development status and social media information of Pendle Finance through the links in the table below.

Metadata Source	URL
🌎 Official Website	https://pendle.finance/
📖 White Paper	https://docs.pendle.finance/resources/lite-paper
🛰️ Source Code (GitHub)	https://github.com/pendle-finance
🐦 Twitter	https://twitter.com/pendle_fi
🤖 Reddit
🎺 Message Board	https://medium.com/pendle

Where to Buy Pendle Finance

Here are the top ten world crypto exchanges where traders can buy Pendle Finance in 2024.

Top10 Exchanges	Listed Status	Page URL
Binance	Listed	https://www.binance.com/en/trade/PENDLE_USDT
Coinbase	Not listed
Kraken	Not listed
KuCoin	Listed	https://www.kucoin.com/trade/PENDLE-USDT
Bitfinex	Not listed
OKX	Not listed
Huobi	Listed	https://www.htx.com/trade/pendle_usdt
Bitstamp	Not listed
Bybit	Listed	https://www.bybit.com/en/trade/spot/PENDLE/USDT
Gate.io	Listed	https://www.gate.io/trade/PENDLE_USDT

Frequently Asked Questions