Non-liquidatable leverage on Pendle Principal tokens(PT)
Timeswap is the gateway for the creation of money markets for any token. Be it LP tokens, vault shares, tokens with no secondary liquidity, etc. Time Travelers have swapped all of them through Time! That’s the true value a degen gets after entering the Time Machine.
With more than 20% of ETH supply already staked, Liquid Staked Tokens (LSTs) growth is just inevitable. Given the massive adoption of LSTs (like stETH from Lido), it only makes sense to integrate them with as many protocols as possible and enable the degens to use LSTfi to the fullest.
Staying harmonic with Pendle!
Pendle is the one protocol leading the wave of LSTfi from the front row. Pendle has amassed over $137M in TVL, about 38% of it is made up of LSTs.
Pendle essentially strips yield-bearing assets into two components:
- Principal tokens (PT): Representing the Principal component of the token.
- Yield tokens (YT): Represent the underlying Yield.
Yield stripping is one state-of-the-art innovation done by Pendle. This mechanism allows market participants to trade the underlying yield of the asset. For example, Bob can sell his PT at a discount to buy more YT if he anticipates increasing yields. On the other hand, Alice can buy some PT at a discount to claim the principal in full at maturity.
Pendle has done over $350M in yield trading volume. The majority of yield trading volume on Pendle happens in the wstETH pool, aka the LSTfi pool!
Pendle on Timeswap
Combining Timeswap’s non-liquidatable money markets with Pendle assets creates a great synergy in combining both protocols. Timeswap has launched a money market where Pendles’ PT-wstETH ’25 can be used as collateral to borrow USDC, enabling PT holders to unlock liquidity. Given the nature of Principal Tokens (PT), degens buy it to get discounted assets which can be claimed in full at maturity. Currently, PT-wstETH enables you to buy wstETH at a 5.89% discount!
PT holders can use Timeswap to get temporary liquidity by using their PT as collateral, all while not being bothered by price movements.
⏳ Time Travel here -> app.timeswap.io
Timeswap’s no-liquidation design ensures that the borrowers won’t be liquidated in case of any price changes. This also unlocks a huge potential to leverage PT by borrowing in loops to buy more Principal Tokens.
The potential for non-liquidatable leverage is endless and the Pendle pool is another testament of it.
Time Is Money ⏳
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