Question 1

What is a Principal Token (PT) in Pendle?

Accepted Answer

A Principal Token (PT) represents the principal component of a yield-bearing asset and functions similarly to a zero-coupon bond in traditional finance. When deposited into Pendle, a yield-bearing token is split: the yield stream goes to a Yield Token (YT), and the principal is represented by PT. At maturity, PT redeems at a 1:1 ratio for the accounting asset — for example, PT-stETH redeems for the equivalent value in stETH. Because PT is purchased at a discount to its maturity value, the difference represents a fixed yield locked in at the time of purchase. This return is not affected by variable yield fluctuations in the underlying protocol, making PT a tool for earning predictable fixed income in DeFi. PT holders receive no ongoing yield or points — those flow entirely to YT holders. A common use case is deploying PT as collateral in money markets such as Aave and Morpho, where its predictable maturity value reduces liquidation risk. Two redemption mechanics apply: rebasing assets like stETH and aUSDC increase in token count over time, while interest-bearing assets like wstETH and ezETH increase in per-token value. In both cases, PT redeems 1:1 for the accounting asset at maturity.

Question 2

What is a Yield Token (YT) in Pendle?

Accepted Answer

A Yield Token (YT) represents the yield-generating portion of a yield-bearing asset. Holders receive all streaming yield and rewards — including points, airdrops, and governance tokens — generated by the underlying protocol up until the token's expiry. The rate displayed to YT holders is the Underlying APY from the base protocol. Because YTs trade at a fraction of the underlying asset's price, they provide amplified exposure to yield movements — effectively a form of leverage on yield. A minor increase in the underlying protocol's APY can generate outsized percentage returns on a YT position, making them attractive for yield speculation and rewards farming. YT value consistently decays toward zero as maturity approaches. Under constant implied yield conditions, the price declines proportionally with remaining time: a YT at 30 days remaining would be worth roughly half its value at 15 days remaining. The market's Implied APY is the pricing rate for YT — a position is profitable when actual average yield over the period exceeds the implied rate paid at purchase. Users can claim accumulated yield and rewards at any time through the Pendle Dashboard, without waiting for maturity. Upon expiry, YT reaches zero value automatically.

Question 3

How does the Pendle AMM work?

Accepted Answer

The Pendle AMM is a specialized automated market maker purpose-built for time-decaying yield assets. Rather than concentrating liquidity within a static price range, it concentrates liquidity within a pre-configured yield range called the Implied APY range, which dramatically reduces slippage for trades within expected yield boundaries. The AMM curve dynamically tightens over time through an algorithm that accounts for yield already accrued and decreasing time-to-maturity, minimizing impermanent loss for liquidity providers as uncertainty narrows. A key innovation is the single-pool flash swap mechanism: because the price relationship P(PT) + P(YT) = P(underlying) always holds, YT trades are routed through the PT liquidity pool via flash swaps, meaning both tokens share a single pool of capital. Liquidity providers earn from four simultaneous sources: PT fixed yield, underlying SY yield, swap fees (which scale with time-to-maturity), and PENDLE token incentives.

Question 4

How does liquidity provision work on Pendle V2?

Accepted Answer

Liquidity providers on Pendle V2 deposit into PT/SY pools and earn trading fees plus PENDLE incentives. Because PT converges to face value at maturity, LP positions have a known floor — LPs are not exposed to the same impermanent loss dynamics as in standard AMMs. Liquidity is single-sided: you deposit the underlying asset and Pendle handles the split internally.

Question 5

What is sPENDLE?

Accepted Answer

sPENDLE is Pendle Finance's liquid staking and governance token. Users stake PENDLE at a 1:1 ratio to receive sPENDLE instantly, and can unstake via two options: a standard 14-day withdrawal period for a 1:1 redemption, or immediate unstaking with a 5% fee. sPENDLE holders who remain active in protocol governance earn a share of Pendle's protocol revenue. The protocol allocates 80% of fees generated from yield accrual and swap activity to buy back PENDLE tokens on the open market, then distributes them to active sPENDLE holders every two weeks via merkle distribution through the Pendle dApp. A holder is considered active as long as they vote when a Pendle Protocol Proposal is available, or have their sPENDLE deployed in an eligible DeFi integration — in which case it is automatically considered active at all times. Unlike many staking derivatives, sPENDLE does not appreciate in value over time — its PENDLE redemption ratio remains fixed at 1:1. It is fully fungible and composable, enabling use across the DeFi ecosystem. sPENDLE replaced vePENDLE as Pendle's primary staking and governance mechanism, with existing vePENDLE holders receiving virtual sPENDLE balances that transitioned as their positions unlocked.

Question 6

Which blockchains does Pendle V2 support?

Accepted Answer

Pendle V2 is natively deployed on 12 blockchain networks: Ethereum (the primary deployment), Arbitrum, BNB Chain, Mantle, Optimism, Base, Sonic, HyperEVM, Berachain, Monad, Katana, and Ink. Each network has its own set of verified smart contract deployments accessible through the Pendle GitHub repository, organized by chain ID. Beyond native deployments, Pendle supports cross-chain PT bridging, allowing Principal Tokens minted on one network to be bridged to supported destination chains such as Avalanche and Unichain. This expands where PT can be used as collateral or redeemed without requiring the underlying market to exist on every chain. The Pencosystem — Pendle's ecosystem of 35+ protocol integrations — extends PT and YT usability across these chains. Integrations include leading money markets such as Aave and Morpho (which accept PT as collateral), yield aggregators like Yearn, and centralized exchange platforms including Binance and OKX. New chain deployments are added periodically as Pendle expands its multi-chain presence, with each deployment undergoing a security review.

Question 7

Is Pendle V2 audited?

Accepted Answer

Yes. Pendle V2 smart contracts have been audited by multiple independent security firms. Audit reports are publicly available in Pendle's documentation.

Pendle V2

Fixed Yield for Everyone

Control Your Yield

Core Technology

Yield Tokenisation

Pendle AMM

sPENDLE

Cross-chain Compatible

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