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Vantias encyclopedia of Pendle

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How Pendle works, from the tokens to the lending markets and oracles built around them. Eight articles, meant to be read in order.

  1. PT, YT, SY and LP: what each token is a claim onPendle splits a yield-bearing token into two claims: one on its value at a set date, one on its yield until then. Four tokens carry the pieces.
  2. Implied yield: the rate a PT's price carriesA PT's price and the time left to maturity together give a yearly rate. That rate is the implied APY, and it is a price, not a forecast.
  3. Maturity: what happens on the last dayEvery PT and YT carries a date. On it, the PT becomes redeemable at any time, the YT stops earning, and the pool's price has nothing left to discover.
  4. Looping: borrowing against a PT, and how it endsA PT can be lent against. Borrowing against a PT and buying more of it multiplies the fixed rate and the risk together.
  5. Oracles for PT collateralA lending market sees a PT through its oracle. Two designs are common: one follows Pendle's own market, the other follows a fixed schedule. Each fails in its own way.
  6. Wrappers, keys and the way outBetween a PT and the asset it finally pays out there can be several contracts. Each adds a step to the way out, and an owner who may be able to change it.
  7. Depegs: when a price leaves the value it redeems forA stable or yield-bearing token has a value it can be redeemed for and a price it trades at. Most of the time the two match. A depeg is the time they do not.
  8. How to read a Pendle marketA Pendle market page shows a handful of numbers. Each answers one question, and none of them answers the question of risk.