Pendle price

🖼️ Diagram of the Pendle mechanism and LP concept Recently, due to the popularity of @FalconStable, discussions about @pendle_fi have also increased significantly. The $susdf pool expiring on 9/25 has a daily trading volume of tens of millions, even surpassing one hundred million. Readers familiar with me know that I have always believed Pendle is one of the biggest innovations in this round, but due to its complex concept, it is not very friendly for newcomers. I have recently received many private messages asking about related concepts, so I thought I would write an article to introduce it. First, tokens on Pendle are divided into three types of assets. - SY: The wrapped version of the underlying asset on Pendle, which can be exchanged back to the underlying asset at a 1:1 ratio at any time, or split into 1 PT + 1 YT. - PT: Principal token, which can be exchanged back to SY tokens at a 1:1 ratio if held until the expiration date. The discount at the time of purchase represents the yield for holding until the expiration date. - YT: Yield token, holding YT is equivalent to holding an SY asset, enjoying its holding rights (points, staking rewards, etc., which vary by project). The asset value on Pendle is affected by time, so it is usually expressed using Implied APY, which removes the time factor, making it easier to judge price levels. So what is the Implied APY we usually see? Let me explain it in simpler terms. PT = (discount earned / PT purchase price) / days until expiration, which equals the annualized amount you can earn daily from purchase until expiration. YT = The interest you need to pay to "borrow" this asset, and all interest for the entire duration is paid upfront at the time of purchase, so at expiration, you must return the asset, and the value of the YT you hold will decrease to zero as it pays off the interest daily. How are these assets priced? Because the price difference between YT and PT is huge, one is the principal, and the other is just interest, so these two types of assets cannot form an AMM v2 pool (the values of the two assets in the pool must be equal). So when forming LP, it is done through SY + PT, because SY = PT + YT, thus incorporating the value of YT. By using the ratio of these two assets in the pool, the value of YT can be determined. Although it seems complicated, all of this is just to price the value of YT. Once the value of YT is determined, the value of PT is also determined, as the sum of the two must equal 1, so the value of PT can be seen as passively determined, simply by taking 1 - YT value. As for forming YT, you will encounter YT-Mode, what is that? Many projects now encourage you to deposit into Pendle because Pendle is a great place for asset accumulation. Through cooperation with Pendle, projects can significantly increase their TVL. Therefore, project teams offer the maximum point multiplier for Pendle assets to attract users to store assets. In Pendle, the assets that can have rights are YT and the SY portion in LP (the PT portion in LP is equivalent to splitting YT and selling it to others, so the rights for this part go to those who bought YT). YT-Mode determines whether you want to split your existing SY into PT + YT, and whether to sell YT to continue forming the pool. If you enable YT-Mode, this part of YT will be retained, so the asset ratio you contribute to the pool = the original ratio of the pool. Since the ratio remains unchanged after you contribute, it will not affect the price of YT. If your asset amount is large or the pool is relatively small, it is best to enable YT-Mode to avoid significantly impacting the price. As for the earnings from forming LP, they are mainly divided into three parts: 1. Earnings from the PT portion appreciating over time. 2. Earnings from transaction fees for providing liquidity. 3. Pendle earnings provided by Pendle. The first part comes from selling YT after splitting SY into PT + YT, so if you enable YT-Mode, you will not actually have this part of the earnings (it becomes YT held by you). The third part, if you do not stake vePendle, will only have a 1x basic multiplier. As your liquidity contribution in the pool increases = your staked Pendle token relative to the total staked proportion, it will gradually increase to a maximum of 2.5x. However, this part is generally difficult for most people to achieve, and the homepage of the official website shows 2.5x, so you still need to click in to see the actual situation. Here, taking the recently popular @FalconStable 9/25 pool as an example, since 80% of the pool is PT, and the current YT yield rate is 32%, forming LP by selling PT alone can yield approximately 32% * 0.8 = 25.45% returns relative to the principal. And Pendle earnings without staking weight is 1.6%, not the displayed 4.01%. There is also an additional 9% annualized yield from the SY portion owned, as SY only accounts for 20%, so relative to the principal, it is 9% * 0.2 = 1.8%. The points for providing LP are also calculated based on SY, so if you put in 1000 susdf but do not enable YT-Mode, you will only earn 200 $susdf a day, which equals 36 points, resulting in only 7200 points a day. So for those who mainly want points rather than returns, enabling YT-Mode is essential; otherwise, the points will be sold for returns. For example, a few days ago with @strata_money, simply holding only yields 30x points, but through Pendle, it yields 60x points, so many people deposit into Pendle for points. If they sell the YT points, it goes against the original intention. This is the basic concept of Pendle. If there is an opportunity, I will share more operational strategies. But you need to understand this first to grasp the operational logic in others' shares later. Pendle is definitely one of the biggest innovations in this round; it would be a pity not to understand it!