Episode 117 — Pendle — The Yield Trading Protocol

EPISODE 117 — Pendle — The Yield Trading Protocol

Traditional fixed-income markets have existed for centuries. Governments and companies issue bonds that pay a fixed interest rate so investors can plan around a specific expected return. Interest rate swaps allow institutions to exchange variable-rate income for fixed-rate income depending on their view of future conditions. These instruments did not exist in DeFi until Pendle built them. If you stake Ethereum and earn 4%, you have no way to guarantee that rate tomorrow — it could be 2% or 8% next week. Pendle changed this by tokenising the future yield of any yield-bearing asset and making it separately tradable from the principal.

In this episode of Crypto for Beginners, we explain how Pendle works from first principles. We cover the core mechanic: when you deposit a yield-bearing asset — staked ETH, Ethena's sUSDe, a tokenised Treasury bill — into a Pendle pool with a specific maturity date, the protocol splits it into two tokens. The Principal Token — PT — represents the right to redeem the full underlying at maturity and trades at a discount that encodes a fixed annualised yield. The Yield Token — YT — captures all the variable yield the underlying earns until maturity and provides leveraged exposure to DeFi interest rates.

We explain in concrete numbers what locking in a fixed yield via PT looks like: buying PT-sUSDe at $0.917 and redeeming at $1.00 at maturity is a predetermined 8.7% annualised return regardless of what funding rates do in between. We explain YT tokens as directional yield bets and how they were used for leveraged points farming during the EigenLayer restaking era. We cover Pendle's peak of $13 billion TVL in 2024-2025, its position in early 2026, the transition from vePENDLE to sPENDLE governance and fee sharing, the Boros expansion into off-chain yield products, and the growing institutional interest in on-chain fixed income instruments that Pendle makes possible.

Keywords: Pendle Finance explained, PT YT tokens Pendle, Pendle yield trading, fixed yield DeFi, PENDLE token, sUSDe Pendle pool, how does Pendle work, yield tokenisation, DeFi fixed income, Pendle TVL 2026, EigenLayer points Pendle, sPENDLE staking, Pendle PT explained, DeFi yield strategies, Pendle Boros explained, PENDLE governance, fixed rate DeFi 2026, Pendle beginner guide, Pendle Ethena integration, yield trading protocol Hosted on Acast. See acast.com/privacy for more information.