What Is Pendle Finance? PT, YT and Fixed Yield Explained

Pendle Finance is a DeFi protocol that splits a yield-bearing token into two parts. The principal token (PT) can be bought at a discount and redeemed at full value on a set maturity date. The yield token (YT) collects all the yield the asset earns until then. PT gives you a fixed yield. YT is a leveraged bet that the variable yield will beat what the market expects.

This is called yield tokenization. This guide covers how it works, a worked fixed-yield example, the 2026 move to sPENDLE, Boros, and the risks.

How Pendle works: SY, PT and YT

Pendle describes itself as a permissionless yield-trading protocol built on existing yield sources: liquid staking and restaking tokens, yield-bearing stablecoins and tokenized real-world assets. It doesn't create yield. It repackages yield another protocol pays.

1. SY (Standardized Yield) is a wrapper that gives every yield-bearing token the same interface, so stETH becomes SY-stETH. Per Pendle's SY docs, it is usually 1:1 with the underlying and has no maturity. The app handles it for you.
2. PT (Principal Token) is "essentially a zero-coupon bond". At maturity, 1 PT redeems for 1 unit of the accounting asset.
3. YT (Yield Token) collects the yield, and any points, that 1 unit of the underlying earns until maturity. Then it is worth zero.

Deposit 1 SY and you get 1 PT plus 1 YT. Pendle's minting docs compare this to bond stripping in traditional finance. Because the halves add up to the whole, the price of PT plus the price of YT equals the price of the underlying. If PT trades at 0.96, YT trades at about 0.04. Each maturity is a separate market with its own price.

One detail catches people out. According to the PT documentation, PT redeems for the accounting asset shown in brackets in the market name. 1 PT-ezETH (ETH) redeems for 1 ETH worth of ezETH, not 1 ezETH. Check the brackets before you buy.

Fixed yield with PT: a worked example

Most people use Pendle for PT. With the yield sold off separately, PT trades below its accounting asset and rises towards full value as maturity approaches. That rise is your fixed return. Pendle shows it as the Implied APY, which is the same number as PT's Fixed APY. The glossary formula is:

Implied APY = (1 + YT price ÷ PT price)^{365 ÷ days to expiry} − 1

A hypothetical example (made-up numbers, not a live quote):

• A stablecoin PT has 182 days to maturity and trades at 0.96 of its dollar accounting asset.
• You spend 10,000 USDC and receive about 10,416.67 PT, ignoring fees and slippage.
• At maturity you redeem about 10,416.67 dollars' worth of the accounting asset, a gain of 416.67.
• Annualized: (1 ÷ 0.96)^365/182 − 1 ≈ 8.5%. With YT at 0.04, the glossary formula gives the same result.

The rate is fixed only if you hold to maturity. Sell early and you get the market price that day. Per Pendle's fee docs, the trading fee is (fee tier ÷ 365) × days to maturity, so early trades cost more. Redeeming after maturity has no protocol fee. But if you leave matured PT unredeemed, its yield goes to Pendle's treasury, not to you.

"Fixed" also means fixed in the accounting asset. If that asset depegs, you're repaid in a depegged asset. PT's predictable value is why lenders such as Morpho, Silo and Euler accept it as collateral. See Morpho vaults explained.

YT: leveraged yield and points

YT is the opposite trade. You pay a little up front and receive the yield on a much larger amount. The YT docs call this "longing the yield": you profit if the average Underlying APY beats the Implied APY you paid. In the same hypothetical market (YT at 0.04, implied APY about 8.5%):

• 1,000 USDC buys about 25,000 YT.
• If the underlying averages 10% over 182 days, the YT collects about 1,247, a profit of about 247.
• If it averages 6%, the YT collects about 748, a loss of about 252.
• Pendle takes 5% of all yield and points accrued by YT, which lowers both outcomes.

YT trends to zero at maturity. If implied yield stays flat, its price falls in a straight line, so 15 days out it is worth about half what it was 30 days out. YT also earns the same points as 1 unit of the underlying, and Pendle's docs describe it as a popular tool for farming airdrop points. Points have no guaranteed value.

How the Pendle AMM handles PT and YT

Pools pair PT with SY. The AMM docs say liquidity is concentrated in a yield range rather than a price range. If implied yield moves outside it, liquidity gets too thin and some trades stop working. The curve tightens as maturity nears, which Pendle says keeps impermanent loss minimal for LPs who hold to maturity. YT trades go through the same pool using flash swaps. LPs earn PT's fixed yield, the underlying yield on SY, swap fees and PENDLE incentives.

PENDLE, vePENDLE and the move to sPENDLE

Pendle used to run a vote-escrow model: lock PENDLE for up to two years for vePENDLE, earn fees and vote on emissions each week. In its sPENDLE announcement of 20 January 2026, Pendle said only about 20% of PENDLE supply was engaged, and rewards had concentrated among a few expert voters. What changed:

• sPENDLE went live on 20 January 2026. Per the sPENDLE docs, you stake PENDLE 1:1 and can unstake after 14 days, or instantly for a 5% fee.
• New vePENDLE locks were paused on 29 January 2026. Existing holders got a non-transferable sPENDLE balance boosted up to 4x, decaying to 1x by the end of their lock.
• Fees fund buybacks. 80% of Pendle V2 yield and swap fees buy back PENDLE, and up to 100% of it goes to active sPENDLE holders every two weeks. You only count as inactive if you skip a vote while a proposal is open.
• Emissions became algorithmic. Weekly gauge votes were replaced by a data-driven model that Pendle expected to cut emissions by about 30%.

The fee docs list the revenue sources as a 5% cut of YT yield and points, plus swap fees. LPs keep 20% of swap fees. The rest is split 80% to buybacks, 10% to the treasury and 10% to operations. For why fee-backed rewards matter, see real yield in crypto.

Boros: trading funding rates

Boros is Pendle's funding-rate product. It launched on Arbitrum in August 2025 with BTC and ETH funding markets from Binance, each capped at $10 million of open interest and 1.2x leverage, FinanceFeeds reported.

Per the Boros docs, a Yield Unit (YU) represents the funding earned on 1 unit of collateral. Long YU pays a fixed rate and receives the floating funding rate. Short YU does the reverse, which lets a cash-and-carry trader lock in a fixed return. Boros now also lists spread markets on the gap between two exchanges' funding. Positions are margined and can be liquidated, so this is a trading venue, not a savings product. As of 14 October 2026, DefiLlama shows about $7.5 million of TVL on Boros. New to funding? Read how crypto funding rates work.

Pendle TVL and supported chains

Pendle is EVM-only. Its deployment docs list Ethereum, Arbitrum, Base, BNB Chain, Optimism, Mantle, Sonic, HyperEVM, Berachain, Monad, Katana and Ink.

As of 14 October 2026, DefiLlama shows about $1.23 billion of TVL in Pendle V2, not counting staked PENDLE. Ethereum holds about $782 million, Arbitrum about $175 million and Monad about $154 million. That is down from a peak of about $13.4 billion on 19 September 2025. Pendle's TVL depends on demand for the assets it lists, so it can swing sharply.

Pendle risks: what can go wrong

• Underlying asset risk. PT redeems into whatever is inside the SY. On 10–11 October 2025, Ethena's USDe briefly traded as low as $0.65 on Binance while holding near $0.99 on Curve and Uniswap, per Netcoins. It recovered the same day, but it showed how fast a yield-bearing stablecoin can come under stress. See our USDe explainer.
• The watermark rule. If the yield-bearing token's exchange rate falls below its highest recorded level, the glossary says PT redeems below expected value and YT stops earning.
• Smart-contract and integration risk. Most newer SY contracts are upgradable proxies. In September 2024, Penpie, a separate protocol built on Pendle, lost about $27 million to an exploit. Pendle paused its contracts and said its funds were unaffected, The Block reported.
• Liquidity before maturity. Exiting early depends on pool depth and where implied yields have moved.
• Leverage. Borrowing against PT to buy more PT multiplies every risk above and adds liquidation risk.
• YT decay. YT goes to zero by design. If the yield or points you collect fall short, you lose most or all of what you paid.

Where JewelSwap fits

JewelSwap doesn't integrate Pendle. We operate on MultiversX, Sui and Radix. For stablecoin yield on Sui, JewelSwap runs Ember Loop, a public beta vault that is unaudited. It deposits USDC into Ember Protocol's eEARN vault and loops it on Suilend, so it carries leverage and liquidation risk. Withdrawals are queued, and US and UK residents should not use it. See the Ember Loop guide. JewelSwap also offers liquid staking (JWLSUI, JWLEGLD, JWLXRD) and Scallop and Cetus farms on Sui.

Frequently asked questions

What is Pendle Finance in simple terms?

Pendle splits a yield-bearing token into a principal token (PT) and a yield token (YT). PT is bought at a discount for a fixed return at maturity. YT collects the variable yield until maturity and then expires worthless.

How does Pendle give a fixed yield?

PT trades below its accounting asset and redeems 1:1 for it at maturity. The gap is your fixed return, as long as you hold to maturity and the underlying asset doesn't fail.

What happens to Pendle YT at maturity?

It stops earning and is worth zero. Yield collected before maturity can still be claimed. YT is only profitable if the yield and points it collected exceed its cost.

What is sPENDLE?

sPENDLE replaced vePENDLE in January 2026. You stake PENDLE 1:1 for it and can unstake after 14 days, or instantly for a 5% fee. Active holders receive PENDLE bought back with 80% of Pendle V2 yield and swap fees.

Is Pendle Finance safe?

No DeFi protocol is risk-free. Pendle's own contract risk sits on top of the risks of each listed asset, such as depegs, plus thin liquidity before maturity. A fixed rate doesn't help if the underlying asset fails.

Which chains is Pendle on?

EVM chains only: Ethereum, Arbitrum, Base, BNB Chain, Optimism, Mantle, Sonic, HyperEVM, Berachain, Monad, Katana and Ink. Boros runs on Arbitrum.

Keep reading

• What is USDe?
• Yield-generating stablecoins explained
• How to earn yield on stablecoins
• What is ERC-4626?
• Funding rates explained

Educational content, not financial advice. Mechanics are from Pendle's documentation as of 15 October 2026 and may change. TVL figures are from DefiLlama as of 14 October 2026. The PT and YT examples are hypothetical and leave out fees, slippage and gas.