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. |
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| 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
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Tokenomics Timeline.
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Ecosystem Users.
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Resources.
Author.
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