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A permissionless DeFi yield-trading protocol

Core Concept of Pendle

Pendle is a permissionless DeFi yield-trading protocol, where users can execute various yield management strategies.

By creating a yield market in DeFi, Pendle unlocks the full potential of yield. Pendle enables users to execute advanced yield strategies, such as:.

  • Long assets at a discount
  • Fixed yield for low-risk, stable growth
  • Long yield
  • A mix of any of the above strategies

How does it work?

They first wrap yield-bearing tokens into SY(standardized yield tokens). Then, SY is split into their principal and yield components, PT (principal token) and YT (yield token) respectively, which allows them to be traded via the custom V2 AMM.

*SY is a token standard that implements a standardized API for wrapped yield-bearing tokens within smart contracts. All yield-bearing tokens can be wrapped into SY, giving them a common interface that can be built upon. SY opens up Pendle’s yield-tokenization mechanism to all yield-bearing tokens in DeFi, creating a permissionless ecosystem.

This brings the TradFi interest derivative market (worth over $400T in notional value) into DeFi, making it accessible to all. PT is the equivalent of zero-coupon bonds while YT is the equivalent of coupon payments

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