Pendle Finance Launches Support For LP Derivatives
Key Takeaways
Pendle Finance has launched tokenized yields for Sushi LP Positions.
Users can now split their LP position into derivative tokens, allowing for speculation on future market movements.
Derivatives like Pendle’s yield tokens are a growing part of the DeFi ecosystem.
Share this article
Pendle Finance has launched support for Sushi LP (SLP) tokens, allowing users to trade and hedge swap fees, and speculate on the risk of impermanent loss (IL).
Pendle’s LP Derivatives
Pendle Finance is giving users the ability to create derivatives of their Sushi liquidity provider (SLP) tokens. The announcement comes after Pendle successfully raised $3.5 million to launch the new feature back in April.
SLP tokens can now be split into two components: ownership tokens (OT) and yield tokens (YT). By buying and holding these tokens, users can gain exposure to LP positions without providing liquidity themselves, similar to how derivatives function in traditional finance.
Ownership tokens (OT) represent the underlying assets used to provide liquidity to the LP position. As such, users holding OT tokens are exposed to the impermanent loss that the position may incur through future price movements. On the other hand, yield tokens (YT) give the holder access to the fees generated by the LP position without the risk of IL.
Pendle co-founder and CEO TN Lee has commented on the launch of the protocol’s new feature, stating:
“By introducing SLP as a supported asset, we bring a new utility to the DeFi ecosystem. Users are now able to trade and hedge swap fees with minimal exposure to impermanent loss, which is something that has not been possible before.”
The ability to split LP positions opens up new opportunities to speculate on future market movements. For example, if a trader has a conviction that the yield on an LP position will increase in the future, she could buy YT tokens to gain exposure to the potential increase without risking IL. Conversely, a trader could hedge against the risk of IL by opting to sell his OT tokens when he expects increased market volatility while retaining the yield generating YT tokens.
Currently, Pendle supports PENDLE/ETH and ETH/USDC SLP tokens, with more liquidity pairs planned for the future.
The DeFi ecosystem on Ethereum has continued to grow despite the market-wide pullback earlier this year. Derivatives are seeing increased interest, with the leading provider of crypto-based perpetual contracts, Perpetual Protocol, launching a $47 million fund to boost DeFi derivatives. With the launch of tokenized yields, Pendle will be well-positioned as the market for DeFi derivatives expands. The PENDLE token has soared over 80% on the news of the protocol’s new feature.
Disclaimer: At the time of writing this feature, the author owned BTC and ETH. One or more members of Crypto Briefing’s management team has invested in Pendle Finance.
Share this article
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
Pendle Finance Raises $3.5 Million to Launch Tokenized Yield Market
In the latest major DeFi raise, Pendle Finance has raised enough to bring their vision of a secondary market for tokenized yield to the DeFi space. Pendle Finance Ushers in…
How to Trade Using the Inverse Head and Shoulders Pattern
In stock or cryptocurrency trading, you may have heard of the term “inverse head and shoulders.” Also known as the “head and shoulders bottom” formation, the inverse head and shoulders chart pattern can…
Perpetual Protocol Launches $47M Fund to Boost DeFi Derivatives
Decentralized derivatives platform Perpetual Protocol has launched a new ecosystem fund based on token swaps. Perpetual Unveils Ecosystem Fund Perpetual Protocol, a virtual automated market maker for trading on-chain derivatives,…
Nansen Discusses the Growth of DeFi on Ethereum
Crypto Briefing sits down with Ethereum analytics firm Nansen’s researchers to discuss the state of DeFi since the market-wide crash in May. DeFi Yields Are Falling Crypto is currently experiencing…
