In this article, we’ll discuss information about the Pendle Finance project and PENDLE token

We are seeing finance being rebuilt on open rails, with DeFi having the potential to become an independent financial system. In a healthy and mature capital market, yields can be traded, be it in bond coupons, interest rate swaps or other financial instruments. Pendle aims to assist in achieving this next milestone in DeFi.

What is Pendle?

Pendle is the first protocol that enables the trading of tokenized future yield on an AMM system. We 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.

Pendle exists on top of first-degree protocols. We currently support Aave and Compound, with more platforms to be integrated in future.

There are three components that make up Pendle’s system:

  1. Yield tokenization

  2. Pendle’s Automated Market Maker (AMM)

  3. Governance

  4. Hedgers

Why Pendle?

  • Accessibility

Pendle aims to support numerous protocols and assets, allowing you holistic and effortless management of yield on a single platform.

  • Flexibility

You own your capital. On Pendle, you can deposit or withdraw as you please, without having to wait for contract maturation.

  • Fully On-Chain

All transactions are handled by smart contracts and are verifiable. This means transparency and honesty between Pendle and you.

System Overview

How Pendle Works

Minting and Trading

  1. User mints XYT and OT through Pendle by depositing aToken; OT (ownership token) and XYT (future yield token) are minted. OT represents ownership of the underlying aToken, and XYT represents the future yield of the underlying aToken.

  2. XYT Minter can sell the XYT or add to the XYT liquidity pool in exchange for LP tokens to earn liquidity incentives.

  3. XYT tokens can be purchased or sold, and after the change of ownership has occurred, the entitlement of subsequent interest revenue tied to the underlying aToken will be changed to the new XYT owner.

  4. XYT token can be traded until its expiry. XYT has no value upon expiry. The OT holder can choose to roll forward to a new expiry and repeat the process, or redeem the underlying.

Redeeming the Underlying Asset

  1. Redeeming aToken before contract expiry requires the possession of both OT and XYT. The OT holder can obtain XYT by either purchasing XYT from the market or withdrawing XYT from the liquidity pool./

  2. With both OT and its corresponding XYT in the wallet, the minter can execute redemption of the underlying aToken from Pendle.

$PENDLE TOKEN

The page describes the $PENDLE tokenomics

$PENDLE will be a pure utility token at launch, with governance functions to come after the protocol has matured sufficiently. It will eventually be key to the value accrual mechanics and management of the protocol.

Token Ticker: PENDLE

Token Type: ERC-20