Pendle has recently announced the launch of V2 of its yield-trading protocol, positioned as a holistic venue for yield-trading and enabling the fixed income market towards Decentralized Finance.
Pendle is a developing DeFi yield-trading protocol, which is set to bring the $6T fixed-income industry into the cryptocurrency space. Pendle is focused on allowing the yield tokenization of any yield-bearing asset into its Principal and Yield components. The Principal token is analogous to zero-coupon bonds, while the Yield token is equivalent to the separate coupon payments.
After tokenizing the yield-bearing asset into its 2 components, Pendle enables yield trading by providing a specialized Automated Market Maker (AMM) to trade those components, creating various strategies to leverage or hedge on yield. By using the given approach, users will be able to control their exposure to yield rates and expand their investment opportunities such as purchasing assets at a discount or accessing fixed yields via low-risk and stable returns. In addition, users can gain exposure to future yield streams without the need for collateral or combine these strategies to diversify their portfolio.
The launch of PendleV2 includes four major upgrades which are permission less asset integration, a more capital efficient AMM, improved overall user experience, and the use of vePENDLE as a governance asset. Pendle has implemented EIP-5115 to enable the seamless and permission less integration of any yield asset onto the protocol. The given proposal will allow users the liberty to create an open yield market just like Uniswap and remain in line with the core virtues of blockchain, negating any possibility of protocol centralization.
The upgraded AMM incorporated into Pendle V2 allows the protocol to concentrate liquidity within a certain range thus improving capital efficiency by up to 200x and minimizing the risk of loss for liquidity providers. Gas usage has also been optimized and the availability of 4 revenue streams further enhances the capabilities of the protocol. In order to further bolster the usability of the protocol and ensure quick and seamless onboarding of users, Pendle V2 includes an updated user interface that focuses on convenience, with a clear ability for newcomers to buy assets at a discount.
The Pendle protocol has undergone several rounds of auditing by independent third-party auditors to ensure its credibility and security for users. All audit reports can be found on the official Pendle website and are open for review. The Pendle team consists of experienced professionals with multiple ICPC finalists and IOI medalists, which has been supported by prominent investors such as Mechanism Capital, Crypto.com and The Spartan Group.
The project has already garnered supports from multiple platforms in the DeFi industry, including FRAX, Convex, Lido, Kyber Network, LooksRare and other ecosystems. The connection of these well known projects to Pendle will ensure the equal and mutually beneficial redistribution of value that Pendle V2 is set to bring to the decentralized finance market.
The development team at Pendle intend to continue scaling the protocol in the near future, as partnership announcements and mutual cooperation scenarios are being discussed with various market players. The team is also considering the possibility of attracting treasuries and fund managers for exploring institutional use cases of Pendle.Â
The Pendle Protocol posts regular updates on project traction in their social media groups.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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