Pendle is a permissionless yield-trading protocol where users can execute various yield-management strategies.

There are 3 main parts to fully understand Pendle:

Yield Tokenization

First, Pendle wrap yield-bearing tokens into SY(standardized yield tokens), which is a wrapped version of the underlying yield-bearing token that is compatible with the Pendle AMM (e.g. stETH → SY-stETH). SY is then split into its principal and yield components, PT (principal token) and YT (yield token) respectively, this process is termed as yield-tokenization, where the yield is tokenized into a separate token.

Pendle AMM

Both PT and YT can be traded via Pendle’s AMM. Even though this is the core engine of Pendle, understanding of the AMM is not required to trade PT and YT.

vePENDLE

As a yield derivative protocol, we are bringing the TradFi interest derivative market into DeFi, making it accessible to all.

By creating a yield market in DeFi, Pendle unlocks the full potential of yield, enabling users to execute advanced yield strategies, such as:

Fixed yield (e.g. earn fixed yield on stETH)

Long yield (e.g. bet on stETH yield going up by purchasing more yield)

Earn more yield without additional risks (e.g. provide liquidity with your stETH)

A mix of any of the above strategies