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Key Takeaways
- Pendle (PENDLE) is a DeFi protocol for trading future yields on crypto holdings.
- Launched in 2021, it aims to create a more efficient market for yield generation.
- Pendle uses a special Automated Market Maker (AMM) designed for assets with built-in time decay (like future yield).
- The project aims to create a tradable market for this future yield, separate from the underlying asset.
What Is Pendle (PENDLE)?
Pendle (PENDLE) is a DeFi protocol launched in 2021 that allows users to trade future yields on their crypto holdings. Founded by a team of developers and DeFi experts, Pendle aims to create a more efficient market for yield generation. It achieves this through a novel Automated Market Maker (AMM) system for assets with built-in time decay.
How Does Pendle (PENDLE) Work?
Pendle works by essentially tokenizing the future yield of your crypto holdings. Here’s a breakdown of the process:
- Deposit Yield-generating Assets – You start by depositing assets that generate returns, like tokens from lending protocols like Aave (aTokens).
- Minting PTs and YTs – Pendle then mints two new tokens in return for your deposit:
- Principal Token (PT) – Represents your claim to the original deposited asset.
- Yield Token (YT) – This represents your claim to the future yield that the deposited asset will generate.
- Expiry Dates – Both PTs and YTs have expiry dates. You must claim your original asset and the earned yield by that date.
- Trading Yield – Pendle utilizes a special kind of Automated Market Maker (AMM) to facilitate trading of these YTs. This allows users to:
- Lock-in yields – Depositors can sell their YTs to lock in a fixed yield upfront.
- Speculate on yield movements – Traders can buy YTs if they believe the future yield will be higher than what’s currently priced in.
Here’s an analogy to help you understand: Imagine Pendle takes your interest-bearing savings account and splits it into two parts: a certificate for the principal amount (PT) and coupons representing future interest payments (YTs). You can then trade these coupons (YTs) based on your expectations for future interest rates.
Pendle (PENDLE) Token And Tokenomics
Tokenomics
The PENDLE token is the native cryptocurrency of PENDLE. It is used for:
1. Incentive and Utility
2. Governance (Future Implementation)
- PENDLE holders can stake their tokens to acquire vePENDLE (vote-escrowed PENDLE).
- vePENDLE grants holders voting rights on proposals that shape the future of the Pendle protocol.
Token Details
Total Supply 258,446,028 PENDLE
Circulating Supply 238,185,588 PENDLE
Current Price $2.46
Market Capitalization $586,545,449
This information is current as of March 22nd, 2024, and the token’s price, market value, and available supply may fluctuate.
Distribution
- Team (22%)
- Investors (15%)
- Ecosystem Fund (18%)
- Liquidity Incentives (37%)
- Liquidity Bootstrapping (7%)
- Advisors (1%)
Where Can I Buy Pendle (PENDLE)?
Binance – Binance is a major exchange offering a wide range of cryptocurrencies. It offers multiple ways to buy crypto, including credit cards, debit cards, and peer-to-peer (P2P) trading.
Bybit – This exchange is known for its derivatives and margin trading features, but you can also use the platform for spot trading.
Gate.io – This exchange provides PENDLE trading, other cryptocurrencies, and margin trading options.
Is Pendle (PENDLE) A Good Investment?
Pros:
- Flexibility – Pendle offers various options for managing your crypto assets. You can earn interest, hedge against price movements, and create custom investment strategies.
- Advanced AMM – Pendle’s Automated Market Maker (AMM) is designed to overcome a common issue in yield trading – time decay. This means you may earn more consistent returns on your holdings.
Cons:
- High slippage, Low Trading Volume – Slippage refers to the difference between a trade’s expected price and the actual price at which it is executed. It can be a major issue for Pendle users, especially when trading during high volatility.
- High user learning curve – Pendle is a relatively complex protocol, and it can be difficult for new users to understand how it works. This can make it a less attractive option for some investors.
Final Thoughts
Pendle is an interesting project. While it is not entirely new, the recent price surge has put it on many investors’ radars. The project also boasts some interesting partnerships, creating bullish sentiment similar to established blue-chip cryptocurrencies.
