What is Pendle?

If you've heard terms like "fixed yields" and "yield tokenization" in the crypto world but aren't quite sure what they mean, this article is for you.

We'll explain what Pendle does in the simplest way possible.

Let's Start with an Everyday Example

Imagine you own an apartment that generates $2,000 in rent every month.

Now someone tells you: "I can help you split this apartment into two separate vouchers" —

• First voucher (PT): Represents "the apartment itself". In 3 years, you can exchange this voucher to get your apartment back
• Second voucher (YT): Represents "all rental income for the next 3 years". Whoever holds this voucher can collect the $2,000 monthly rent

This is exactly what Pendle does, except instead of "apartments", it uses yield-bearing crypto assets (like staked ETH, stablecoin deposits, etc.).

Pendle Explained in One Sentence

Pendle splits "yield-bearing crypto assets" into "principal" and "future yields" as two separate parts that can be traded independently.

What's the benefit? The biggest advantage: you can lock in fixed yields.

In traditional finance, we have "fixed deposits" — you deposit money, the interest rate is fixed, and you get it back at maturity. In the DeFi world, interest rates are typically variable, 10% today but possibly only 3% tomorrow.

Pendle gives you a "fixed deposit" experience in DeFi.

What are PT and YT?

The core concepts of Pendle are PT and YT. Let's explain them in plain language:

PT (Principal Token) — Like a Discounted Gift Card

PT = Principal Token

Imagine you see a gift card with a face value of $1,000 at Costco, now selling for only $950. You buy it and can redeem it for $1,000 worth of goods at maturity.

The $50 difference is your "fixed yield".

In Pendle:

• You spend 0.95 ETH to buy 1 PT-stETH
• At maturity, you can exchange the PT for 1 stETH (equivalent to 1 ETH)
• You earned 0.05 ETH, which is your fixed yield

It's that simple! No need to watch the market daily, no worrying about rate fluctuations. Buy, wait until maturity, redeem. Done.

YT (Yield Token) — Like a Rent Receipt

YT = Yield Token

Going back to the apartment example, YT is "the right to future rental income".

YT holders can collect all yields generated by the underlying asset before maturity. But note:

Understanding with a Diagram

Your crypto asset (e.g., stETH)
  │
  ├── PT (Principal Token) → Redeem original asset at maturity ✅ Recommended for beginners
  │     Like a discounted gift card, exchange for face value at maturity
  │
  └── YT (Yield Token) → Collect all yields before maturity ⚠️ Advanced operation
        Like a rent receipt, becomes zero at maturity

Why Would People Use Pendle?

1. Those Seeking Fixed Yields → Buy PT

• "I don't want to watch interest rates fluctuate daily, just give me a fixed number"
• Similar to fixed deposits, lock in the rate
• Lowest risk Pendle operation

2. Those Bullish on Rising Rates → Buy YT

• "I think future staking yields will be higher, I want to amplify returns with less capital"
• Has leverage effect, potentially high returns
• Very high risk, becomes zero at maturity

3. Those Seeking More Returns → Provide Liquidity (LP)

• "I'm willing to put in more effort for more diversified yields"
• Earn trading fees, underlying yields, and PENDLE rewards simultaneously
• Requires more DeFi experience

How Impressive are Pendle's Numbers?

Pendle isn't a small experimental project—it's the absolute leader in DeFi yields:

A Simple Use Case

Let's walk through the most basic Pendle operation: buying PT to lock in fixed yields.

Scenario: You have 1 ETH and want to earn fixed yields.

Steps:

1. Connect your browser wallet (like MetaMask) to the Pendle website
2. Find the PT-stETH pool on the "Trade" page (maturity in 6 months)
3. See "Fixed APY: 8%" — this means you can lock in 8% annualized yield
4. Use 1 ETH to buy PT-stETH (Pendle will automatically convert)
5. Wait 6 months until maturity
6. Redeem and get back about 1.04 ETH (6-month yield ≈ 4%)

That's it! No daily operations required, no need to watch the market.

Comparing Pendle to Things You Know

What are the Risks of Pendle?

Every investment has risks, and Pendle is no exception:

Risk Reduction Suggestions

• Start with small amounts: Test the process with $10-50 first time
• Choose well-known underlying assets: Like stETH, sDAI, and other assets with longer histories
• Use low-fee blockchains: Recommend Arbitrum for cheap gas fees
• Verify official URLs: Only use app.pendle.finance, beware of phishing sites
• Mark maturity dates on calendar: Don't forget to redeem

Is Pendle Right for Me?

Suitable for you if you:

• Already understand basic crypto wallet operations
• Know what DeFi is (at least read beginner articles)
• Want higher fixed yields than exchange savings accounts
• Are willing to learn new tools

Not yet suitable if you:

• Have never owned cryptocurrency
• Don't know what MetaMask is
• Have no concept of DeFi
• Are unwilling to take any risks

What Should I Do Next?

If you decide to try Pendle, here's the recommended learning path:

1. Understand the concepts first: You've already finished this article!
2. Read operation tutorials: Learn specific step-by-step procedures
3. Try with small amounts: Buy PT once with a small amount to experience the full process
4. Deep dive into strategies: Learn more advanced yield strategies after becoming familiar

Summary

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Want to buy cryptocurrency on an exchange to participate in Pendle? We recommend these platforms:

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Further Reading:

• DeFi Beginner's Guide — If you're not familiar with DeFi yet
• Crypto Wallet Basics — Learn how to use wallets
• Complete Pendle Introduction — More in-depth technical details
• Pendle Operation Tutorial — Step-by-step instructions
• Pendle Yield Strategies — Advanced strategy analysis
• Complete Staking Guide — Learn about staking and stETH