Pendle Finance has launched V2 of its protocol, setting the foundations to bring the fixed-income industry, currently valued at $6 trillion, into DeFi and positioning itself to become a one-stop destination for all yield-trading purposes.
Pendle Finance focuses on yield trading with two main functions:
- Tokenization of yield to allow any yield-bearing asset to be separated into the Principal token and Yield token
- Yield-trading using Pendle’s native AMM enabling users to trade the Principal and Yield tokens. As such, users control their exposure to various yield rates and unlock the potential of yield as an essential DeFi building block.
These two new functions will play a crucial role in moving Pendle V2 forward. Users can experiment with simple and advanced strategies performing well regardless of market conditions. Various strategies will be made available such as buying assets at a discount, fixed yield for low-risk and stable returns, leverage exposure to future yield streams without collateral requirements, or a combination of these three.Â
Following the PendleV2 upgrade, users will be able to experience the following:
- Simple and Pro Mode experiences
- Permissionless integration of yield assets
- Up to a 200-fold increase in capital efficiency while minimising the risk of loss for liquidity providers
- Introduction of vePENDLE for governance, incentive channelling and boosting rewards
The introduction of vePENDLE marks an exciting development for the Pendle protocol and its approach to yield tokenization. vePENDLE holders will vote and direct the rewards flow to different pools. In doing so, they help incentivize liquidity providers in the pool.
The use of EIP-5115 – initially proposed by the Pendle team – facilitates the permissionless integration of any asset onto the protocol. Doing so enables users to freely create a yield market with yield-bearing assets, allowing for a more dynamic and diverse ecosystem.
Pendle has forged several crucial partnerships in the DeFi space. Prominent partners include FRAX, Convex, Lido, Kyber Network and LooksRare. More partnerships are on the horizon and the team sees merit in expanding to other blockchains. There are also talks of attracting treasuries and fund managers to explore Pendle’s institutional use case and eventually break into the trillion-dollar fixed income market.
About Pendle Finance
Pendle enables the permissionless tokenization and trading of yield. Pendle allows anyone to obtain fixed yield or gain leveraged yield exposure without the risk of liquidation.
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