Pendle Academy
  • Start Here
  • 1️⃣Pendle 101
    • Chapter 1 - Introduction to Optimizing Yield
    • Chapter 2 - Yield Tokenization Basics
    • Pendle 101 - Key Takeaways
  • 2️⃣Optimizing Yields with Pendle
    • Chapter 3.1 - Fixed Yield on Pendle
    • Chapter 3.2 - More Yield via Liquidity Provision
    • Chapter 4 - Yield Trading Basics with YT
    • Chapter 5 - Important concepts in yield trading
    • Optimizing Yields with Pendle - Key Takeaways
  • Cheatsheet for the Impatient
    • PT / YT / LP Cheatsheet
  • 3️⃣Yield Trading Deep Dives
    • Chapter 6 - Shorting Yield
    • Chapter 7 - Providing Liquidity while Trading Yield
    • Chapter 8 - Long Yield (Obtain Leveraged Yield-Exposure)
    • Chapter 9 - Identifying Opportunities to Long/Short Yield
  • 4️⃣Ecosystem & Resources
    • Pendle Wars & "Bribes"
    • $PENDLE Farms
    • Points Trading
      • Points Support Page
    • Withdrawals / Deposits from Other Chains
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On this page
  • What is Pendle
  • PT & YT — a quick round-up
  • PT Cheatsheet — Earn fixed yield
  • YT Cheatsheet — Increase yield exposure (Long yield)
  • LP Cheatsheet — Earn passive extra yields providing liquidity
  1. Cheatsheet for the Impatient

PT / YT / LP Cheatsheet

PreviousOptimizing Yields with Pendle - Key TakeawaysNextChapter 6 - Shorting Yield

Last updated 1 year ago

What is Pendle

Pendle lets you earn better yields. We help you secure better certainty and better returns (i.e. higher APY 🔥).

  1. Earn fixed yield (with PT)

  2. Provide liquidity (LP) to earn extra yield with minimal or zero impermanent loss (IL)

  3. Long yield (with YT)

PT & YT — a quick round-up

Imagine Pendle being a marketplace where property owners can split and trade their principal (rights to the ownership of the property) and yield (rights to rental payments) separately. You can then sell or trade the yield portion even before maturity. This creates new ways to manage and even speculate on yield.

💡 Using stETH as an example: Principal (Right to Principal of stETH) + Yield (Rights to stETH yield) = Yield-bearing asset (stETH)

Principal Token (PT)

  • 1 PT lets you redeem 1 unit of the original asset at maturity date.

  • PT is similar to in traditional finance.

Yield Token (YT)

  • 1 YT lets you receive the yield of 1 unit of the original asset until the maturity date, claimable in real-time.

  • YT is similar to in traditional finance.

You can sell PT and YT anytime on Pendle market, with no lock or penalty, at market price. They are traded 24/7.

Perhaps the most important takeaway about PT & YT:

💡 PT Price + YT Price = Underlying Asset Price


PT Cheatsheet — Earn fixed yield

TL;DR

Earn guaranteed amount of your chosen asset if you hold the position until the maturity date.

Yield source

Volatility

Low

Investment profile

Long term

Beginners friendly

Guaranteed

Both capital and return are guaranteed, if you hold until maturity

Underlying asset yield outlook

Bearish

Price changes

Price rises in the short term with…

  1. time

  2. Rising underlying asset price (and vice versa) Note that PT is always 1:1 redeemable to underlying asset at maturity date.

Valuation

Time to enter

  1. If you believe the asset will generate less APY in the future,

  2. If you want to hedge against falling yields,

  3. If you feel satisfied enough with the advertised APY,

  4. If you believe PT is too undervalued

Early exit

Anytime, there’s no lock or penalty. PT always has a market price in Pendle’s AMM.

Capital efficiency

Other comments

Can I profit if I early exit my PT?

When you exit early, your earnings will depend on the PT’s market price at exit. You may earn higher or lower (in extreme cases, at a loss) than the advertised APY at entry. Note that, however, PT is always 1:1 redeemable to the underlying asset at the maturity date, you do not necessarily need to sell under unfavorable short-term price moves.

YT Cheatsheet — Increase yield exposure (Long yield)

TL;DR

Increase your yield exposure (long yield). Either hold it until maturity, or buy low and sell high to turn a quick profit. You profit when either or both…

  1. the price of YT rises,

  2. the yield produced by the YT becomes bigger than your cost buying the YT

Yield source

Volatility

Higher

Investment profile

Short or Long term

Intermediate to Advanced investors

Guaranteed

N/A

Underlying asset yield outlook

Bullish

Price changes

Price rises with…

  1. Rising underlying asset price

  2. Rising yield/reward token asset price (if applicable to that asset) (and vice versa) Note that time works against YT — YT price gradually falls over time to zero at maturity.

Valuation

Time to enter

  1. If you believe the asset will generate more APY in the future,

  2. If you want to hedge against rising yield,

  3. If you want to speculate on short-term rise of yield % or yield token prices

  4. If you believe YT is too undervalued

Early exit

Anytime, there’s no lock or penalty. YT always has a market price in Pendle’s AMM.

Capital efficiency

LP Cheatsheet — Earn passive extra yields providing liquidity

TL;DR

Earn extra “free” yields on top of your otherwise idle yield-bearing assets. A Pendle pool is denominated in your selected underlying asset only (PT + SY) (SY = wrapped underlying asset). There’s also no impermanent-loss (IL) concern at maturity.

Yield source

Multiple avenues:

  1. Native yields — asset’s underlying yield + PT’s fixed yield

Volatility

Low IL is minimal (pool consists of highly correlated tokens only) before maturity date. No IL at maturity date because PT in the pool will become 1:1 redeemable to underlying asset.

Investment profile

Short or Long term

Beginners friendly

Guaranteed

APY not guaranteed but capital is guaranteed if you hold until maturity

Underlying asset yield outlook

Slightly bearish, due to some presence of PT in the pool

Price changes

Short term price change behavior is similar to PT due to some presence of PT in the pool. Note that the PT in the pool is always 1:1 redeemable to underlying asset at maturity date.

Time to enter

Early exit

Anytime, there’s no lock or penalty. Your APY is also not affected if you exit early.

Comment

Learn more on Chapter 9 - Identifying Opportunities to Long/Short Yield

PT has , its value grows over time and becomes 1:1 redeemable to the original asset at maturity date. Your realised discount becomes your fixed yield.

Falling

PT is cheap when is much higher than the

No leverage by itself. However, there are that allow you to deposit PTs as collateral to borrow assets, or even loop-leveraging.

PT can be a viable alternative to spot, with similar risk exposure, and the benefit of downside cushion thanks to the fixed yield realized upon redemption. PT can also be a , you may profit in short-term if underlying yield goes down.

YT until maturity date, claimable in real time.

Rising

YT is cheap when is much lower than the

Since , you effectively get a leveraged yield exposure (typically 20x or more), with no actual borrowing involved. So there’s no liquidation or oracle error risks.

Swap fees 3. $PENDLE incentives (Optional) You can boost your APY by locking PENDLE for . vePENDLE holders can also boost their Liquidity Provision APY up to 2.5X.

Anytime. Timing or underlying yield outlook aren’t very important. When implied APY is low, it is more favorable to enter with the “” enabled, and vice versa.

Can be used to hedge against falling underlying yield due to some presence of PT in the pool. Learn more about using .

zero-coupon bond
detached coupons of bonds
lending platforms
a lower entry cost compared to underlying asset
short-yield strategy
receives all yield produced by the underlying asset
YT is much cheaper than the underlying asset
vePENDLE
LP as part of your yield trade
Zero Price Impact Mode
implied APY
Implied APY
Underlying APY
implied APY
Implied APY
Underlying APY