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Pendle Finance

The Pendle protocol enables the permissionless tokenization and trading of yield. Pendle allows anyone to purchase assets at a discount, obtain fixed yield, or long DeFi yield. PENDLE is the platform token of Pendle, and is the cornerstone of value accrual mechanics and management of the protocol.

Categories:

DeFi

Updated:

2023-04-03

Tags:

Yield Bearing

Ticker:

PENDLE

Token Strength.

Token Utility:

$PENDLE
Governance: staking and locking PENDLE into vePENDLE lets users participate in governance decisions.
Boost LP rewards: Holding vePENDLE can increase liquidity provider rewards by up to 2x.
Revenue share: vePENDLE holders receive a share of the protocol's revenue from options trading fees.
Vote for pools: vePENDLE holders can vote for pools to receive incentives and influence liquidity distribution.
fee share: Users holding vePENDLE can receive a portion of swap fees generated by voted pools.

Demand Driver:

vePENDLE:
Holders of vePENDLE seek to boost pool rewards, receive protocol incentives, and share in the revenue of Pendle Finance as the demand for DeFi yield markets rise.

Value Creation:

Pendle enables users to split yield-bearing assets into their principal and yield components, principal token and yield token, allowing these to be traded separately.
Creating a yield market in DeFi, Pendle unlocks the full potential of yield, enabling users to execute advanced yield strategies:
- Buy assets at discount
- Fixed yield for low-risk, stable growth
- Gain long exposure to future yield

Value Capture:

Value accrual to token:
vePENDLE holders are entitled to a cut of protocol revenue collected, including a volume-weighted share of swap fees from voted pools (80%), 3% of YT yield fees, and all yields after maturity of YT/PT.

Value accrual to protocol:
None mentioned.

Business Model:

The business model for Pendle finance:

Revenue comes from:
80% of swap fees, 3% of tokenized yield, and yields after maturity of YT/PT.

Revenue is denominated in:
ETH, WBTC, DAI, USDC, PENDLE emissions

Revenue goes to:
Liquidity providers receive 20% of swap fees. vePENDLE holders receive the remaining revenue, distributed pro rata based on vote weight and vePENDLE balance.

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Protocol Analysis.

Problems & Solutions
Problem: 
DeFi investors struggle to access discounted assets, fixed yield, or long DeFi yield due to the absence of permissionless yield markets.

Solution: 
Pendle Finance protocol enables easy access to yield markets through permissionless tokenization and trading of yield, including Uniswap pools. Pendle V2 upgrade and EIP5115: Standardized Yield (SY) simplify DeFi yield market growth, while vePENDLE utilities, such as channeling protocol incentives, add value for PENDLE token holders.
Predecessors
Ribbon Finance - Ribbon Finance is a DeFi protocol that enables users to create and trade structured products such as yield curves and yield baskets.
BarnBridge - BarnBridge is a DeFi protocol that enables users to hedge against yield sensitivity and manage risk through the creation and trading of structured tokens.
Opyn - Opyn is a decentralized options protocol that allows users to buy and sell options on various DeFi assets, providing hedging and yield-enhancing opportunities.

Investment Take

... coming soon

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