What is PENDLE?

What is Pendle Finance?

Pendle Finance is a decentralized finance (DeFi) protocol powering the trade of interest rate derivatives, by separating yield from yield bearing assets. Similar to zero coupon bonds and coupons in traditional finance, this novel on-chain approach offers liquidity providers and yield farmers new ways to manage risk, speculate on future yield, and optimize their investment strategies.

Pendle’s explanation of how it works

Using the Standardized Yield token standard, Pendle separates ownership of the underlying asset and future yield. This creates a Principal Token (representing underlying asset), and a Yield Token (representing future yield).  

Pendle also introduces its novel AMM, which accounts for time-decay. With the value of Yield Tokens being time-dependent, the design of Pendle’s AMM helps to prevent potential losses from mispriced financial assets. For more on Pendle’s AMM, click here.   

What does the PENDLE token do?

PENDLE is the native token of the Pendle Finance ecosystem, and serves two primary functions, incentives and governance. Users that provide liquidity to the platform are rewarded in PENDLE and a percentage of trading fees. PENDLE can also be staked in exchange for vote-escrowed PENDLE (vePENDLE), which enables holders to vote on proposals and boost their rewards.

Who Created Pendle Finance?

Pendle Finance was officially launched in June 2021 by an pseudo-anonymous team, publicly known as TN lee, GT, YK, and Vu. The project has attracted notable investors, including Bitscale Capital, Crypto.com | Securely Buy, Sell & Trade Bitcoin, Ethereum and 250+ Altcoins Capital, and Binance Labs. 

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