In the ever-changing decentralized finance (DeFi) world, Pendle Finance stands out as a trailblazing platform. That revolutionizes user interaction with yield assets. Through its novel method of tokenizing future payouts, Pendle Finance provides investors and traders a fresh opportunity to enhance their DeFi strategies. This book will cover everything about Pendle Finance, from its beginnings and plans. They have internal workings, tokenomics, and real-world uses.
What Is Pendle Finance?
Pendle Finance is a permissionless yield trading platform that runs on the Ethereum (ETH) blockchain and is a DeFi protocol. Principal tokens (PT) on Pendle Finance represent the asset. YT tokens represent future yield. Pendle Finance’s primary objective is to enable DeFi yield farmers to access capital and financial flexibility. This dual-token system makes it easier for customers to manage their assets and participate in various yield methods.
One of Pendle’s unique qualities is that its automated market maker (AMM) takes time decay into account. This system helps reduce the risk of financial losses caused by mispriced assets, a significant problem with conventional AMMs. This feature allows consumers to control their yield exposure and exploit market opportunities effectively.
Pendle Finance Origin
Pendle Finance has experienced significant growth and innovation during the past few months. Currently, the platform has a TVL of approximately $7 billion, making it a foundation in the DeFi ecosystem. Binance Labs has invested in Pendle Finance to enable the platform to expand across multiple chains and serve both retail and institutional users.
The project has also integrated Origin Ether (OETH) to allow users to tokenize and trade future yields, which is useful when using yield optimization strategies. Pendle fell victim to a domain hijack attack in July 2024, aided by an unsecured Squarespace account. However, it regained access after 40 minutes and with all funds intact. These developments further illustrate Pendle Finance’s commitment to security, innovation, and growth within the DeFi space.
How Does Pendle Work?
Users can trade tokenized future yields on Pendle Finance, which is built on the Ethereum network. When users fund their Pendle accounts through smart contracts, their assets are tokenized into PT and YT, respectively. Tokens denoted by PT represent the initial investment, and tokens denoted by YT represent the asset’s yield over a specific time frame. Users can now trade PT and YT tokens separately, giving them more flexibility in yield management methods.
Users can control their exposure to the returns of multiple DeFi protocols and bet on future yields by trading these PT and YT tokens on Pendle’s platform. In addition, the automated market maker (AMM) on Pendle controls the value of PT and YT tokens according to variables like market demand and time decay, guaranteeing accurate and fair pricing for efficient trading. Users can easily adjust to changing market conditions or investment strategies by redeeming their PT and YT tokens whenever they want. This allows them to recoup their original assets and any dividends earned.
Pendle Token was last seen at around $3.04 on February 7, 2025, down only 1.3% from the previous close. Pendle recently announced the launch of new pools allowing up to 45% floating and 10% fixed yield on Bitcoin-backed tokens. This was launched with Lombard and the Ethereum layer-2 network Corn and has generated over $13 million in user deposits since launch. The PENDLE token was also listed on the LCX Exchange on October 15, 2024; Pair: PENDLE/EUR - October 16, 2024.
What Is VePendle?
The Pendle Finance ecosystem features a governance token called VePendle, which stands for “Voting Escrow Pendle.” You can acquire voting power by storing your PENDLE tokens in a smart contract called a “voting escrow” for a set amount of time.
Users can earn vePendle tokens by storing their PENDLE tokens in the vePendle smart contract. These tokens represent the user’s voting power in the Pendle governance system. Locking up users’ tokens proportionally improves their voting power in governance decisions. Within the Pendle Finance ecosystem, VePendle holders can vote on governance ideas, including changes to the protocol, fees, tokenomics, and other related topics.
Conclusion
Pendle makes tapping into the cryptocurrency market’s yield trading potential easy. With Pendle’s user-friendly layout and thorough training, anyone can use it, whether an experienced trader or just starting with DeFi. Your yield trading activities can be more profitable by taking advantage of Pendle’s revolutionary features.