Glossary

A

Accounting asset

The unit a yield-bearing token's growth is counted in, and the unit a PT's redemption is measured in: at maturity a PT pays the underlying worth one unit of it. For a staked ether token it is ether; for a savings dollar, the base dollar token. More in: PT, YT, SY and LP: what each token is a claim on

Admin key

The account allowed to change a contract: replace its code, pause it, or set its fees and limits. It can be a single key, a multisig or a timelock. More in: Wrappers, keys and the way out

Admin role

The permission, held by an account or a contract, to change a token's settings or grant other permissions; on many tokens it also controls upgrades. More in: Wrappers, keys and the way out

AMM (automated market maker)

A pool that trades by formula instead of matching orders. Each Pendle market is one such pool holding PT and SY; YT trades through the same pool, and Pendle also runs a limit-order book beside it. More in: PT, YT, SY and LP: what each token is a claim on

Audit

A review of a contract's code by a named firm at a point in time. It covers the code and the version it lists, and nothing deployed after it. More in: Wrappers, keys and the way out

B

Basis trade

Holding an asset and selling a futures position on it at the same time, to earn the difference between the two prices (on perpetual futures, the funding) without betting on the price itself.

Borrow rate

The yearly interest paid on a loan in a lending market. In most markets it varies with how much of the pool is lent out. More in: Looping: borrowing against a PT, and how it ends

Bug bounty

A standing public offer to pay whoever reports a flaw in a protocol's code, up to a stated maximum, often run on a platform such as Immunefi or Cantina. More in: Wrappers, keys and the way out

C

CDP (collateralised debt position)

A loan in which a protocol mints its own stablecoin against collateral deposited with it; the stablecoin is repaid to release the collateral.

Collateral

What a borrower deposits to secure a loan. If its value falls too far against the debt, it can be taken to repay the lender. More in: Looping: borrowing against a PT, and how it ends

Cooldown

A fixed wait, set in a contract, between asking to withdraw and receiving the asset. In many contracts its length can be changed by the contract's admin. More in: Wrappers, keys and the way out

D

Delta-neutral

A position whose value does not move with the price of the asset it is built on, because a long and a short of the same size offset each other.

Depeg

A period in which a token's market price differs from the value it is meant to be redeemed for. More in: Depegs: when a price leaves the value it redeems for

E

ERC-4626

The standard interface for a tokenised vault: a deposit mints shares, each a claim on part of the vault's assets, which grow as the vault earns and shrink if it loses. A vault may limit or switch off withdrawals; vaults that need time to pay out add a request step, standardised separately as ERC-7540. More in: Wrappers, keys and the way out

F

Fixed yield

The return of a PT bought at a given price and held to maturity, in its accounting asset, provided the PT redeems in full. More in: Implied yield: the rate a PT's price carries

Funding rate

The periodic payment between the long and the short side of a perpetual future that keeps its price near the spot price. When it is positive, longs pay shorts.

H

Health factor

A loan's collateral value times its liquidation threshold, divided by its debt. Below 1, the loan can be liquidated. More in: Looping: borrowing against a PT, and how it ends

I

Implied APY

The yearly rate a PT's price carries to maturity: (1 / PT price)^(365 / days to maturity) − 1. A price, not a forecast. More in: Implied yield: the rate a PT's price carries

L

Lending market

A pool where depositors lend an asset and borrowers take it against collateral, at a rate the pool sets. Morpho, Aave and Euler run such markets, some of them against PTs. More in: Looping: borrowing against a PT, and how it ends

Leverage

Exposure larger than the capital behind it, financed by borrowing. A loop at 5 times holds five units of PT for each unit of its own capital. More in: Looping: borrowing against a PT, and how it ends

Linear-discount oracle

An oracle that prices a PT at a fixed yearly discount shrinking to zero at maturity, whatever trades happen in the pool. More in: Oracles for PT collateral

Liquid staking

Staking a network's token through a protocol that issues a transferable token in return, which grows with the staking rewards.

Liquidation

The repayment of an unsafe loan by a third party, who takes part of the borrower's collateral at a discount for doing it. More in: Looping: borrowing against a PT, and how it ends

Liquidity

The value held in a trading pool. The less there is, the further a trade of a given size moves the price. More in: How to read a Pendle market

LLTV

Liquidation loan-to-value: the ratio of debt to collateral value at which a loan on Morpho can be liquidated. Other lenders call it the liquidation threshold. More in: Looping: borrowing against a PT, and how it ends

Looping

Depositing a token as collateral, borrowing against it, buying more of the token and repeating, to multiply the exposure to its yield. More in: Looping: borrowing against a PT, and how it ends

LP (liquidity provider)

The holder of a share of a Pendle pool, which holds PT and SY. The share earns a share of the swap fees (Pendle keeps the rest), the yield of the SY, the fixed yield of the PT and any incentives. More in: PT, YT, SY and LP: what each token is a claim on

LTV (loan-to-value)

A loan's debt divided by the value of its collateral. Some lending markets, such as Aave, set a lower limit for new borrowing than the ratio at which they liquidate; Morpho lends up to the liquidation ratio (the LLTV) itself. More in: Looping: borrowing against a PT, and how it ends

M

Maturity

The date on which a PT becomes redeemable for the underlying worth one unit of its accounting asset, and its YT stops earning. More in: Maturity: what happens on the last day

MEV (maximal extractable value)

Value a block producer, or someone paying one, can capture by choosing which transactions go into a block and in what order.

Mezzanine tranche

A tranche between the junior and the senior one: it takes losses after the junior tranche is gone and before the senior one. More in: Depegs: when a price leaves the value it redeems for

Multisig

An account that acts only when a set number of its owners sign, for example 3 of 5. Safe is a widely used one. More in: Wrappers, keys and the way out

N

NAV (net asset value)

What a fund's assets are worth minus what it owes, usually stated per share.

O

Oracle

A contract that reports a price to other contracts. A lending market values collateral at its oracle's price. More in: Oracles for PT collateral

P

Peg

The value a stable or yield-bearing token is meant to hold against its base, kept by the ability to redeem at that value. More in: Depegs: when a price leaves the value it redeems for

Perpetual future

A futures contract with no expiry date. A funding rate paid between its two sides keeps its price near the spot price.

Points

Rewards a protocol counts for holding or using its token, often with no stated value yet. On Pendle, the points of an underlying usually accrue to YT holders and, on the SY they hold, to LPs. More in: PT, YT, SY and LP: what each token is a claim on

Price impact

How far a trade moves the price against the trader. It grows with the trade's size relative to the pool. More in: How to read a Pendle market

Proxy (upgradeable contract)

A contract that forwards every call to code held elsewhere. Its admin can point it at new code, which changes what the token does without changing its address. More in: Wrappers, keys and the way out

PT (principal token)

A claim, at maturity, on the underlying worth one unit of the accounting asset. It trades below that value before maturity; the gap is its fixed yield. More in: PT, YT, SY and LP: what each token is a claim on

R

Redemption

Turning a token back into the asset it is a claim on, through the issuer's contract rather than a market. More in: Depegs: when a price leaves the value it redeems for

Restaking

Committing already-staked tokens to secure further services, for extra rewards and extra ways to be penalised.

Roll

Redeeming a matured PT and buying a later one on the same asset, at that day's implied rate. More in: Maturity: what happens on the last day

S

Stability pool

A pool of a lending protocol's stablecoin that repays the debt of liquidated loans and receives their collateral in return.

SY (standardised yield)

Pendle's wrapper that gives every yield-bearing token one interface, proposed as EIP-5115 (still a draft). PT and YT are split from it. More in: PT, YT, SY and LP: what each token is a claim on

T

Timelock

A contract that makes every change it controls wait a fixed delay before it can run, so the change is visible in advance. Powers it does not control can still act at once. More in: Wrappers, keys and the way out

Tranche

One slice of a shared pool of backing, with its own place in line for losses: the junior tranche loses first, the senior one last. More in: Depegs: when a price leaves the value it redeems for

TVL (total value locked)

The value of the assets deposited in a protocol or a pool at a moment. More in: How to read a Pendle market

TWAP

A time-weighted average of a price or a rate over a window. Pendle's TWAP oracle averages the logarithm of its market's implied rate over the window (a geometric mean). More in: Oracles for PT collateral

U

Underlying APY

What the underlying asset has been earning, as a yearly rate; Pendle shows its average over the last seven days. The YT receives the yield actually earned until maturity, less Pendle's fee. More in: Implied yield: the rate a PT's price carries

Underlying asset

The yield-bearing token a Pendle market is built on, such as a staked ether token or a savings dollar. More in: PT, YT, SY and LP: what each token is a claim on

W

Withdrawal queue

A line of withdrawal requests served in order as the issuer's assets come back. Its length is not fixed. More in: Wrappers, keys and the way out

Wrapper

A contract that holds a token and issues another in its place, to change its interface, its decimals or its rules. More in: Wrappers, keys and the way out

Y

YT (yield token)

A claim on the yield of the underlying, on one unit of the accounting asset's worth, until maturity, with any rewards attached, less Pendle's fee. After maturity the token is worth nothing; what it earned before then stays claimable by the address that held it. More in: PT, YT, SY and LP: what each token is a claim on