Pendle(PENDLE) Complete Guide π
Hello! Today, we're going to learn more about Pendle(PENDLE).
Recently, cryptocurrencies and blockchain technology have been receiving a lot of attention, and among them, Pendle is one of the projects that is receiving a lot of attention.
Shall we get started? π
Introducing Pendle(PENDLE)
Pendle is a platform that presents a new paradigm for cryptocurrencies. Basically, Pendle provides the ability to trade the future earnings of an asset separately. In other words, users have the opportunity to sell the earnings generated from the asset in advance while holding the asset. This allows investors to secure more liquidity.
In short, Pendle is a project that introduced the innovative concept of 'yield tokenization' to the DeFi market. This type of transaction, which was impossible in traditional finance, is now possible through blockchain technology. It will be easier to understand if you think of it as a concept similar to trading only the dividends of stocks separately.
Key Features: Pendle's biggest advantage is that it can create new types of financial products that utilize time value. This allows investors to implement more sophisticated investment strategies.
Pendle's History
Pendle was first launched in 2021. The project started as part of the DeFi (Decentralized Finance) ecosystem and has established itself in the rapidly growing blockchain market. Pendle's founders wanted to overcome the limitations of the existing financial system and provide users with more choice and flexibility.
Pendle's founding team consists of professionals with a background in traditional finance (Traditional Finance) and blockchain developers. Based in Singapore in particular, the team has a good understanding of the characteristics of the Asian market and is actively entering the global market.
In 2022, we launched Pendle V2 to provide an improved user experience and support for various assets. This update made Pendle available not only on Ethereum but also on various blockchain networks such as Arbitrum and Binance Smart Chain (BSC).
To date, Pendle has achieved a TVL (Total Value Locked) of hundreds of millions of dollars, ranking it among the top DeFi protocols. This can be said to be an indicator of the stability of the project and the trust of users.
How Pendle Works
π§ Technical Mechanism
Pendle may look complicated, but it actually has a very intuitive system!
How Pendle works is very interesting. When users deposit certain assets on the Pendle platform, they can separate the future earnings of that asset and convert it into a new token called 'Yield Token'. This Yield Token can be sold or traded to other users, which increases the liquidity of the asset. In addition, users have the advantage of securing profits in advance while holding assets.
Specifically, Pendle separates assets that generate profits (e.g. staked Ethereum) into two separate tokens. One is the 'Principal Token (PT)', which represents the principal, and the other is the 'Yield Token (YT)', which represents the profits. These two tokens can be traded independently, so investors can choose according to their investment strategy.
For example, investors who want fixed profits can buy PT, while investors who want to bet on variable profits can buy YT. In this way, Pendle can satisfy the needs of investors with different risk preferences.
π― Principal Token (PT)
A token that represents the right to receive the principal upon maturity, making it suitable for investors who want fixed returns.
π Yield Token (YT)
A token that represents the right to receive all returns generated until maturity, making it suitable for investors who bet on rising yields.
Pendle's Uses
Pendle has various uses. It is mainly used on DeFi platforms, and users can trade asset yields or invest in other DeFi protocols through Pendle. In addition, Pendle enables new forms of asset trading through combination with NFTs (non-fungible tokens).
The most representative use case is tokenization of staking rewards. The yield of Ethereum 2.0 staking or Liquid Staking Tokens (LST) can be separated and traded through Pendle. This allows staking participants to secure liquidity even during the lockup period.
Another popular use case is the yield separation of DEX LP (Liquidity Provider) tokens. The fee revenue of LP tokens that provide and receive liquidity on Uniswap or Curve can be traded separately through Pendle. This will allow LPs to employ more sophisticated revenue management strategies.
Pendle has recently been increasingly utilized in the real-world asset tokenization (RWA) sector. Work is underway to tokenize the revenue of traditional assets such as real estate or bonds to make them more accessible investment products.
Practical use case: Let's say an investor holds stETH with a 1-year maturity and needs cash after 6 months. Previously, you had to liquidate the entire position, but with Pendle, you can partially cash out by selling only YT.
Pendle Exchange
Pendle is traded on several exchanges. Representative exchanges include Binance, Huobi, and KuCoin, where you can easily purchase Pendle. When trading Pendle on an exchange, you should always consider the exchange's fees and security. It is important to choose a safe exchange.
In addition to centralized exchanges (CEX), Pendle can also be traded on decentralized exchanges (DEX). You can swap PENDLE tokens directly on DEXs such as Uniswap, SushiSwap, and 1inch, and sometimes you can get better prices than on CEX.
In particular, Pendle's unique PT and YT tokens are the most actively traded on Pendle's own platform. You can trade these special tokens efficiently through Pendle AMM (Automated Market Maker), and you can get better liquidity and slippage than on general DEXs.
Please note that Korean investors cannot trade PENDLE directly on domestic exchanges such as Upbit or Bithumb yet, so you must use an overseas exchange. However, since there is a possibility of domestic listing in the future due to regulatory changes, I think it would be good to keep an eye on it.
Pendle Community
Pendle's community is very active. They communicate with users through the official website and social media, and hold various events and AMA (Ask Me Anything) sessions. Community participation has a great influence on Pendle's development, and it helps improve the platform by reflecting users' opinions.
The Pendle community is very active centered around Discord. Here, real-time protocol updates, news of new asset support, and discussions about various investment strategies take place. In particular, through the program called 'Pendle Scholars', experts within the community provide help to new users, so even beginners can easily participate.
Pendle also provides regular educational content and market analysis through its official Twitter account. In particular, it shares new educational materials or protocol updates every Thursday through a weekly event called 'Pendle Thursday'.
Pendle also acts as a governance token, so token holders can vote on the future direction of the protocol. The appeal of this decentralized decision-making process is that the community can directly contribute to the development of the project.
Pendle Wallet
You need a wallet to safely store Pendle. Pendle is compatible with a variety of wallets, and you can use popular wallets such as MetaMask. When choosing a wallet, it is important to consider security and ease of use.
A Web3 wallet is required to use the Pendle platform. MetaMask is the most widely used, but since it supports WalletConnect, you can choose from a variety of wallets such as Trust Wallet, Coinbase Wallet, and Rainbow Wallet.
In particular, Pendle's PT and YT tokens follow the ERC-20 standard, so they can be stored in any wallet that supports Ethereum. However, since you need to connect a wallet to trade directly on the Pendle platform, it is convenient to choose a wallet that you usually use frequently for DeFi.
For security, we recommend using a hardware wallet. Hardware wallets such as Ledger or Trezor can be used in conjunction with MetaMask, which allows you to safely protect your private keys while using Pendle.
Wallet setup tips: When using Pendle, add other networks such as Arbitrum and BSC to your wallet in addition to the Ethereum network. This is because different assets are supported for each network.
Things to note when investing in Pendle
⚠️ Investment risk warning
Pendle investment has a more complex mechanism than general cryptocurrency investment. Don't invest without sufficient understanding!
There are a few things to keep in mind when investing in Pendle. First, the cryptocurrency market is highly volatile, so you should always take risks. Second, it is important to carefully examine Pendle's technical development and community activities. Lastly, it is necessary to collect sufficient information and establish a strategy that suits your investment goals before making an investment decision.
The biggest risks of investing in Pendle are 'impermanent loss' and 'maturity risk'. Since the value of PT and YT fluctuates in a complex manner depending on the return on the underlying asset and the time until maturity, it may show a different aspect from general spot trading.
In particular, YT has the characteristic of decreasing time value as time passes. You can think of it as having a similar nature to options. Therefore, rather than simply investing in anticipation of a price increase, a strategy that comprehensively considers the yield curve and time value is needed.
In addition, since Pendle is a relatively new protocol, there is also smart contract risk. Although it has been audited several times, it cannot be said to be completely risk-free due to the nature of DeFi, so it is important to appropriately adjust the investment size.
Pendle is a project with a lot of potential in the future, and it is expected to play an important role in the DeFi ecosystem.
Learn more about Pendle and don't miss out on the investment opportunity! π
If you have any questions, please leave a comment anytime! π¬