What is Pendle Finance? Pendle Finance is a Yield Derivatives platform that allows users to use future profits as collateral, trading, etc. Pendle Finance itself also receives the support of many famous investment funds in the industry. crypto market. So what is so attractive about Pendle Finance? Everyone, let’s find out in this article.
To understand more about Pendle Finance, people can refer to some more articles:
- What Are Yield Derivatives? Will Yield Derivatives Become the Next Trend of Yield Farming
- What is Yield Farming? When People Become “Farmers”
- What is LSDfi? The First Puzzle Pieces & Potential In The LSDfi Array
Overview of Pendle Finance
What is Pendle Finance?
Pendle introduces a new concept, a new niche market in DeFi, which is DeFi Yield – Trading Protocol, where users can create strategies to profit from their own profits in the future.
Pendle Finance’s operating mechanism
Pendle Finance has a relatively simple operating mechanism as follows:
- Step 1: Pendle Finance will wrap Yield – Bearing Tokens in the form SY (Standard for issuing Tokens that bring future profits).
- Step 2: SY will be divided into 2 types: PT (Principal Token – Original Token) and YT (Yield Token – Yield Token).
- Step 3: PT & YT are traded through a custom Pendle AMM.
For example: You have 100 DAI and want to lock it into the Lending Compound platform for 3 months with a profit of 1 DAI + 0.5 COMP.
Instead of putting your assets into Compound, you can put your assets into Pendle for Pendle to send to Compound. When you put your 100 DAI into Compound, you will receive 100 PT cDAI and 100 YT cDAI.
As I explained above, 100 PT cDAI represents 100 DAI of the original asset. By holding 100 PT cDAI you can claim your 100 DAI again after a period of 3 months. 100 YT cDAI represents future profits of 1 DAI + 0.5 COMP. By holding 100 YT cDAI you can claim profits at any time in real time.
The most basic and simple way when you hold YT, PT or both is as follows:
- Use 1 original asset to mint both PT and YT
- Use PT and YT at a 1 to 1 ratio to redeem the original asset.
- Holding YT allows you to claim rewards anytime you want.
- Holding PT can help you get your original asset back after maturity.
Besides, Pendle Finance allows users to access many strategies that generate profits from future profits including:
- Fixing Your Yield: Based on the supply and demand of PT, you can buy assets at discounted prices and receive the full amount of assets on the maturity date.
- Leverage Yield Farming: Use leverage to generate more profits like 3AC did with Lido Finance & stETH.
- Yield Trading: Your future profits can be bought, sold, traded or continued to compound for more profits.
Development Roadmap
- The project is in the process of expanding to multichain with many different Blockchains such as Arbitrum, Optimism,…
- With the launch of the vePENDLE model, Pendle Wars has resulted. People can read the article Pendle Wars Becomes the Center of LSDfi to better understand this war.
Core Team
The project was built and developed by many people from Vietnam such as Nghia Pham, Thuc L., Daryl Tan, Kevin Tseng, Long Vuong Hoang,…
Investor
- April 16, 2021: Pendle Finance successfully raised $3.7M in Private round with the lead of Mechanism Vapital and the participation of Crypto.com, Spartan Group, Haskey Capital, LedgerPrime, Sora Ventures,… Besides, there are some Angel Investors such as Hongbo – CEO & Co Founder of Debank, Taiyang Zhang – CEO & Co Founder of Ren Protocol,…
- August 23, 2023: Binance Labs announced a successful investment with Pendle Finance.
Tokenomics
Overview of Pendle Finance project token
- Project name: Pendle Finance
- Token code: Pendle
- Blockchain: Ethereum
- Token classification: ERC 20
- Smart Contract: 0x808507121b80c02388fad14726482e061b8da827
- Total supply: 235,890,444
Token Allocation
- Ecosystem Fund: 19.2%
- Core Team: 5.7%
- Circulating: 65.1%
- Incentives: 10%
Token Release
As of October 2022, PENDLE’s inflation will be about 2% per year and also from October 2022, the inflation rate will be reduced by 1.1% every week until April 2026.
Pendle Finance also welcomes suggestions in gorvernance to have initiatives to upgrade or change the tokenomics model to become more effective.
Token Use Case
Pendle Finance uses the veTokens model similar to many DeFi platforms today. Pendle’s veToken model has some of the following characteristics:
- vePENDLE will be locked for a maximum of 2 years, the value of vePENDLE will gradually decrease over 2 years.
- All protocol revenues will be shared with vePENDLE.
- vePENDLE has voting rights to direct incentives to different pools to earn more profits.
- If you are an LP and you hold vePENDLE then you will receive more rewards.
Pendle Finance’s Information Channel
- Website: https://www.pendle.finance/
- Blog: https://medium.com/pendle
- Twitter: https://twitter.com/pendle_fi
- Discord: https://discord.com/invite/9x9VUngNZD
- Tele VN:
Summary
Pendle Finance is a Yield Derivatives platform that opens up a whole new niche in DeFi giving users many opportunities to optimize their profits. If Pendle’s team continues to launch more strategies, Pendle Finance will certainly develop further in the future.