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In recent years, Decentralized Finance (DeFi) has presented a strong case against traditional finance by offering users better control over their financial situation and opportunities to increase profits. One of the recent developments that have turned this dream into reality is yield trading protocols, allowing users to maximize their profits and returns. Pendle Finance (PENDLE) is at the forefront of these protocols.
What is Pendle Finance?
Pendle Finance, which drew all attention with its listing on the giant cryptocurrency exchange Binance, is an uncontrolled DeFi protocol that facilitates the tokenization and trade of future yield through an Automated Market Maker (AMM) system. This yield trading protocol deployed on the Ethereum network and EVM compatible blockchains such as Arbitrum and Avalanche, provides a platform for users to implement various advanced yield strategies. Pendle Finance essentially allows individuals and protocols to maximize their profits irrespective of market conditions.
Launched on the Ethereum blockchain in June 2021, Pendle Finance went live as the first yield tokenization protocol on the main network. Since its debut, this protocol has become one of the fastest-growing projects in the DeFi sector, with tens of millions of dollars locked across three chains. Furthermore, Pendle Finance has a framework that supports other DeFi platforms, including Compound and Aave.
The primary goal of Pendle Finance is to provide an ecosystem for cryptocurrency enthusiasts holding yield-generating assets. It allows them to increase their profits over time and lock in potential earnings in advance. Additionally, the protocol aims to allow investors to be directly exposed to future yield flows without requiring basic collateral. To achieve this, Pendle Finance uses three key components: Yield Tokenization, Automated Market Maker (AMM), and Governance.
To fully understand how Pendle Finance works and creates a yield market in the DeFi world, one needs to know some platform-specific terms. Abbreviations like SY (Standardized Yield), PT (Principal Token), YT (Yield Token) are at the center of the protocol’s operating mechanism.
Owners of yield-generating tokens like aUSDC, SLP, and gOHM can deposit their assets into Pendle Finance. The protocol then converts these yield-generating assets into SY (Standardized Yield), a token standard designed to facilitate interaction with an asset’s yield-generating mechanism and consists of principal and yield components, respectively named PT and YT. Therefore, those depositing yield-generating tokens can mint a principal token and a yield token.
Owners can use their YT in various ways. For example, they can deposit their YT into Pendle Finance’s AMM to provide liquidity and receive swap fees and other Pendle incentives in return. Pendle Finance also allows owners to sell their YTs for cash upfront, allowing them to set interest rates and make instant profits; on the other hand, Pendle Finance users can purchase yield tokens directly without having to own a yield-generating asset.
With YT, which represents the owner’s potential profit right, Pendle Finance creates an efficient and capital-wise productive yield market where investors (or new owners) can be exposed to future yields. They can increase yield risks in bull conditions and hedge against yield risks in bear conditions. However, it is necessary to mention that YT can only be bought and sold until the expiration date when it no longer has a value. When a YT’s term expires, it stops producing yield. At this point, the YT owner can either use the main token for the yield-generating base asset from Pendle Finance or roll over to a new term. However, to carry out any of these actions, the YT owner must also hold the main token.
Where to Buy PENDLE Coin?
The PENDLE coin is securely bought and sold on Binance, the world’s largest cryptocurrency exchange by trading volume. At the time of writing this article, PENDLE coin is traded on PENDLE/BTC, PENDLE/USDT, PENDLE/TUSD pairs.
To purchase PENDLE coins, you need to register on the Binance exchange first. After the registration process is completed, cryptocurrency or fiat money such as Turkish Lira should be transferred to the wallet in your Binance account. After the transfer is completed, PENDLE coin can be bought in any of the three pairs mentioned above.
To make a purchase from the PENDLE/USDT pair, you need to go to the interface of this pair first. From the limit tab on the pair interface, you enter the desired amount to be purchased. After entering the amount, the buying process is completed with the Buy PENDLE command.
