Pendle Review: New Potential In The Swap Market With Impressive Yields

Pendle Finance is a profit protocol that allows users to execute profit strategies using a standardized profit token divided into key and profit components. The project is currently attracting $ 3.7 million from prominent investors, which is receiving significant attention from the community. In this Pendle Review review, let’s find out through the article below.

What is Pendle?

Pendle is the first protocol that allows trading futures tokenized profits on the AMM system. We aim to allow holders of profit-generating assets to generate additional profits and lock in future profits while providing traders with direct exposure to future profit streams without the need for underlying collateral.

This protocol was created by a group of anonymous individuals under the pseudonyms TN Lee, GT, YK, and Vu. It maintains its headquarters in South Korea and has raised $3.7 million in funding from investors such as Bitscale Capital, Crypto.com Capital, Fisher8 Capital, Strategy Round Capital, and others.

Users can trade these tokens on its AMM and cash out before the expiration date to ensure profits. It uses a time-declining AMM model to optimize capital, while increasing access to future yields. Specifically, it makes incremental adjustments for more accurate asset valuations. At the same time, it prevents pools of liquidity from being exhausted. In addition, you can apply profit strategies such as long-term returns, discounted long-term assets, fixed yields, or a combination of this strategy.

There are three components that make up its system:

• Yield tokenization
• Automated Market Maker (AMM)
• Governance

Pendle V2 will be released in late 2022 with redesigned AMM. This updated AMM supports fixed exchange rate trading and offers liquidity terms, greater capital flexibility, and improved efficiency. It establishes trades with low slippage, minimal temporary losses, and the ability for liquidity pool providers to earn fees on two assets, even though they only offer one.

Pendle Review: Purpose Of Protocol

Pendle was founded to improve the profitable trading experience for crypto users. That way, its founders have focused on making cryptocurrency trading more popular. Furthermore, they recognized the challenge associated with time decay. The platform has been designed with specific features that allow traders to create separate tokens for their initial and future profitable assets to optimize flexibility and profitability. At the same time, this protocol employs an innovative AMM that specifically tackles the challenge of declining timing in yield trading.

How does it work?

The protocol gives users control over their productivity. This permissionless DeFi profit trading protocol is currently built on the Ethereum blockchain, where users can implement various profit management strategies.

First, the Pendle wraps 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.

This brings the TradFi interest rate derivatives market (worth over $400 trillion in nominal terms) to DeFi, making it accessible to all. PT is equivalent to a zero-coupon bond, while YT is equivalent to a coupon payment.

By creating a profit market in DeFi, this protocol harnesses the full potential of profits. Pendle allows users to implement advanced profit strategies, such as:

• Long asset price drop
• Fixed yield for low-risk, steady growth
• Long yield
• A combination of any of the strategies above

Why Pendle stands out

• Accessibility: The protocol aims to support multiple protocols and assets, allowing you to manage returns comprehensively and easily on a single platform.
• Flexibility: You own your capital. On Pendle, you can deposit or withdraw money at will without having to wait for the contract to expire.
• Completely on-chain: All transactions are processed by smart contracts and are verifiable. This means transparency and honesty between the protocol and you.

Pendle Review: Services

Pendle offers a more significant opportunity for investors to maximize the returns on their yielding assets without locking up their collateral. These opportunities include minting, bartering, farming, and claiming, and a closer look at these features is essential.

Mint

Users can mint tokens by depositing profitable assets into Pendle. In the Market tab on the interface, select the terms of the trade. This includes input assets, desired assets, and maturity details. That way, the user generates a master token and a profit token for the underlying asset. Through this mining process, assets are segregated from future profits, and these tokens can be used separately in a variety of ways.

Swap

Once the YT has been minted, the user has the option to sell or exchange it. This can be highly lucrative depending on the movement of the underlying asset’s value. It also gives users the opportunity to swap one asset for another, which can generate higher returns in the future. The original PT can also be swapped independently. Swapping is done through the Markets section of the interface. After selecting the Swap tab, choose slippage, trading volume, input assets, outputs, and futures.

Farm

YT can also be added to the liquidity pool. Users can review each pool’s maturity, total liquidity, and annual percentage rate (APY). By contributing to a pool, users receive liquidity pool tokens that allow them to earn liquidity incentives. Liquidity incentives can continue to be earned until liquidity pool tokens are redeemed for cash. Users can increase APY through the use of vePENDLE.

Claim

Once the established expiration date of YT has passed, that token is no longer valid. The user must decide whether to redeem the asset before the expiration date or scroll through the asset to create a new expiration date. To redeem tokens, users must hold both PT and YT. Depending on the situation, this may require users to provide liquidity from the pool or buy new tokens in the market.

To claim the YT as well as the bonus and swap fees, the user must click Claim Profit and Rewards in the Markets section. By cycling through options, users can claim specific rewards and gas fees. Users can also choose how to receive tokens through raw tokens or USDC.

Pendle Review: Tokens

PENDLE token

Its native token is PENDLE. It is an ERC-20 utility token with a maximum total and supply of 231,725,335 tokens. The circulating supply is around 97 million tokens. Its purpose is to manage administration upon completion of the protocol. Specifically, it will support protocol management and value accumulation mechanisms. PENDLE is a hybrid inflation token, with a 2% perpetual inflation rate.

Its initial distribution allocated 37% to liquidity incentives, 22% of the supply to the pool, and 15% to investors. In addition, the ecosystem fund received an allocation of 18%, and 7% was applied to the liquidity launch. The remaining 1% of the supply is reserved for advisors.

However, as of October 2022, PENDLE has modified the way its tokens are distributed. It currently has 65.1% allocated for circulation, 19.2% for ecosystem funds, 10% for incentives, and 5.7% for the pool. Tokens issued to the collection are awarded until April 2023, and the weekly emissions are 667,705, with a 1.1% decrease per week until April 2026.

In addition to the financial benefits associated with token appreciation, users can take advantage of liquidity incentives for additional benefits. Furthermore, this profit trading platform allows users to separate their profit tokens from their main tokens, which allows for improved flexibility and capital efficiency in the profit market. The possibility of loss is always present in the crypto world, but Pendle offers many avenues for users to profit.

vePENDLE Token

Pendle governance relies on the escrow PENDLE by votes, also known as vePENDLE, which allows for greater decentralization. By using vePENDLE, PENDLE holders gain access to a wide range of features that increase the utility of the token.

vePENDLE also serves as an additional source to reduce the PENDLE token supply, thereby increasing token stability and overall protocol durability. In this way, vePENDLE serves as an essential tool for maintaining the long-term health and success of the Pendle ecosystem.

Lock PENDLE and get vePENDLE. Your vePENDLE value is proportional to the amount and duration of the bet (up to 2 years). Each wallet is associated with a unique vePENDLE expiration date.

Your vePENDLE value will decrement over time and return to 0 after the lock time expires. Your staked PENDLE will then be unlocked.

Pendle Review: Fee

Pendle charges mainly two types of fees:

• Forgery fees – at least 3% of the accrued interest from yield tokens allocated to Pendle Treasury
• Swap Fees – the market maker automatically charges a 1% swap fee on trades. 0.85% is then distributed to liquidity providers, and 0.15% is sent to the treasury.
• The management of this protocol through the PENDLE token may affect future fee structure changes.

Conclusion

Crypto investors have intriguing financial potential thanks to yield trading. Pendle was explicitly created to increase the yield trading industry’s profitability. It is as appropriate to experienced traders as it is to those who are new to the world of crypto yield trading because of its user-friendly interface and instructions. You may start using the Pendle app’s capabilities for your yield trading activity right away by launching it.

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DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.