Pendle

Pendle is a decentralized finance protocol that enables trading, yield farming, and liquidity provision of tokenized yield assets. Pendle facilitates this market by splitting yield-bearing tokens into principal and yield tokens and offering liquidity pools by which these tokens can be traded. In doing so, Pendle offers a market for fixed and floating rates of supported yield-bearing tokens by which users can earn fixed yield and provide liquidity to the Pendle pool for the underlying token.

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Pendle works by allowing users to trade and earn yields on tokenized yield assets and, additionally, earn rewards by staking the PENDLE token.

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Yield Tokenization

Pendle allows users to split yield-bearing assets into two parts:

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Principal Token: Represents the underlying asset.

Yield Token: Represents the future yield generated.

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This gives users flexibility in managing exposure to both principal and yield.

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Fixed Yield Opportunities

By selling Yield Tokens (YT), users can lock in a fixed yield on their assets — ideal for risk-averse investors.

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Leveraged Yield Exposure

Traders can purchase Yield Tokens to gain leveraged exposure to yield rates, amplifying returns if yields increase.

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Governance & Utility Token

The PENDLE token is used for governance, staking (vePENDLE), and liquidity incentives. Moreover, PENDLE holders control reward distribution, thus aligning incentives across the protocol.

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Using the Standardized Yield token standard, Pendle separates ownership of the underlying asset and future yield. This creates a Principal Token ( underlying asset), and a Yield Token (future yield). В 

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