Pendle
A DeFi protocol for tokenizing and trading future yields from digital assets, enabling users to separate principal from yield for fixed-rate strategies and speculation.
What is Pendle?
Pendle Finance, launched in June 2021 on Ethereum, is a decentralized protocol that tokenizes future yields from yield-bearing digital assets like stETH, USDe, and LBTC, splitting them into Principal Tokens (PTs) for fixed principal redemption and Yield Tokens (YTs) for trading variable future yields on an automated market maker (AMM). Users deposit assets into Pendle pools to mint PTs and YTs, allowing liquidity providers to earn swap fees (10-30 basis points) while traders speculate on yield rates—locking in fixed APYs up to 15% or betting on rises via YTs. As of September 21, 2025, Pendle’s TVL exceeds $10 billion across 20+ markets, including integrations with Ethena (sUSDe), Aave, Morpho, and Lombard Finance (LBTC), representing over 50% market share in the $14 billion DeFi yield sector and generating $4-5 million in monthly revenue from 3% yield trading fees.
The native digital asset, PENDLE, with a circulating supply of 168.6 million and total supply of 281.5 million, powers governance via vePENDLE locking (up to 2-year periods for voting and fee shares), emissions (600,000 weekly), and incentives for liquidity providers. Priced at approximately $4.19 USD with a market cap of $706 million, PENDLE has seen 45% weekly gains to $5.60 in August 2025 amid cross-chain expansions to Solana, TON, and HyperEVM via Citadel deployments, unlocking $14 billion in non-EVM liquidity. Recent milestones include the August 2025 Boros yield-trading platform launch, boosting Arbitrum activity to 1,428 daily addresses, and partnerships like Almanak’s alUSD stablecoin (1.25x points multiplier) and Falcon Finance’s USDf integration ($273 million TVL on Pendle), positioning it for $15 billion TVL by year-end through RWA tokenization and institutional inflows of $41 billion.
Pendle’s security includes audits from Trail of Bits and OpenZeppelin, with a multifaceted framework addressing past exploits via reactive measures like insurance funds; however, risks include yield volatility (e.g., 60% TVL concentration in Ethena pools) and user complexity in PT/YT mechanics, mitigated by EIP-5115 standardization for interoperability.
Related Terms
Overcollateralization
A requirement for borrowers to deposit collateral worth more than the loan amount to mitigate risk.
Mining and Miner
Mining is the process of validating transactions and adding new blocks to a blockchain by solving computational puzzles, and a miner is who performs this task to earn rewards.
Retail Payment System
Infrastructure for consumer-to-business transactions, handling everyday payments.
Oracle (Prediction Market)
A trusted source that provides off-chain data to resolve the outcome of a prediction market contract on a blockchain.
Price Discovery
The process by which market trading determines the price of a digital asset, reflecting the collective probability of an event’s outcome.
Nakamoto Coefficient
A metric quantifying blockchain decentralization by identifying the minimum number of independent entities needed to compromise network consensus, typically 33% of stake in proof-of-stake systems or 51% of hash power in proof-of-work.