Pendle is a return management protocol that enables users to obtain more by dividing return assets into different pieces and allowing users to speculate about the changes in the basis.
What is Pendle Protocol?
Pendle is an asset management protocol that allows users to unlock their ability to speculate on their return on their returns through various strategies. The main features of Pendle are returns, the AMM (automatic market maker) and voting tokenomics.
Pendle offers a large number of features that focus on all the fluctuations in yield and how investors can make profit from it. It represents a part of the new group of more sophisticated defi protocols, which gradually reflects Tradfi’s niche elements.
This protocol works in a fixed rate that allows users to access more decisive returns and increases the ability of investors to protect and speculate.
Pendle Features
Pendle offers unauthorized yield management and the protocol has three basic features.
1. Return Tockyonization
The protocol uses the SY (Standardized Return) token standard. SY tokens are packaged coins that can be used in Pendle and consisting of two components: Basic tokens (PT) and return tokens (YT).
Any entity with a return can be wrapped in a SY token. The Token standard provides a standardized API for these assets in smart contracts and allows shaping in the defi-general, and this standard may go beyond the protocol by the Pendle team’s proposition of ERC-5115.
Providing more shaping for assets that provide return throughout Defi, will open the doors of the new world of possibilities, and the launch of liquid stinging derivatives (LSDs) has shown the first curtain of this performance.
Returning assets have become a norm in Defi. Users receive basic assets, invest in a source of yield, and receive an asset that provides return in return. Following the above example, placing the DAI in the compound lending pool will result in the user’s having CDAI. CDAI token indicates the amount of DAI provided and the return from the lending activity.
For this reason, Pendle users will have PT-DAI and YT-DAI, which will allow them to trade both freely in Pendle’s unique AMM.
The main tokens represent the principal of the existence and represents the return tokens, all the return created by the existence. Instead of a token, investors now have two token. For ease of understanding, a user’s Steth (Lido’s Liquid Stinging Token) can be. In the Pendle ecosystem, this Steth will be equivalent to PT-Steth + YT-Steth.
PT-Steth is the first amount of Ether of Ether, and YT-Steth is all the stake rewards that accrue by Steth. Users can use the PT in Pendle at a ratio of 1: 1 for the basis asset at the end of the maturity. YT gives the right holder to the entire return produced by the existence that can be requested in real time.
2. Pendle AMM
The effective trade of PTs and YTs requires a market place and is located at the center of the entire ecosystem (automatic market -maker). Pendle’s underlying mechanism involves betting on the return on the return produced by beings that provide return assets.
Users who buy YT get a long time efficiency. They bet that the yield will be traded on Apy, a price directed by the market in the future APY of the asset. In a simple expression, they win if the yield is maintained or increases.
If users want to continue on Wsteth for a long time, they can buy Wsteth returns (YT-Wsteth) in Pendle. The return produced by this return coins wins trade as long as it dominates than the purchase cost.
Theoretically, the opposite side of this trade will be a user who believes that the premium paid will be more outright than the produced return. In practice, liquidity providers in Pendle act as the opposite side of all operations.
Pendle’s AMM matchs PT and SY and uses flash swaps to activate YT transactions through the same pool, ie all operations for a particular asset route through a single liquidity pool.
3. vependle
The last part of Pendle jigsaw vote is the token to Token: vependle. This “last part” is important because vependle owners gain management rights and channel incentives on the platform.
