What is Yield Trading?
Yield trading protocols let you separate an asset's principal from its yield, enabling you to trade future yields or lock in fixed rates. Pendle is the dominant protocol in this category.
How Pendle Works
Standardized Yield (SY): Wrapper tokens that standardize yield-bearing assets for Pendle. Principal Token (PT): Represents the principal that can be redeemed at maturity. Trades at a discount, providing fixed yield. Yield Token (YT): Represents all yield until maturity. Allows leveraged yield exposure.Strategies
Fixed Yield (Buy PT): Purchase PT at a discount and hold to maturity for guaranteed yield regardless of rate changes. Leveraged Yield (Buy YT): Speculate on yields increasing. Small capital controls large yield exposure. LP on Pendle: Provide liquidity to PT/SY or YT/SY pools for trading fees + PENDLE rewards.Top Yield Trading Products
- sUSDe PTs: Lock in Ethena yields
- eETH PTs: Fixed restaking yields
- stETH PTs: Guaranteed ETH staking returns
Risks to Consider
- YT Risk: YT can go to zero if yields disappoint
- Maturity Risk: Must manage positions before expiry
- Smart Contract Risk: Complex protocol mechanics
- Liquidity Risk: Some markets have limited liquidity
Getting Started
- Connect wallet to Pendle
- Choose an asset and maturity date
- Decide: PT for fixed yield or YT for yield speculation
- Execute swap and monitor position
- Redeem at or before maturity