### What is Pendle?

Pendle is a decentralised finance (DeFi) protocol that focuses on yield trading. It enables users to tokenise and trade yield-bearing assets, allowing them to either lock in fixed yields or speculate on yield changes. By utilising yield tokenisation, Pendle separates yield-bearing assets into Principal Tokens (PT) and Yield Tokens (YT), which facilitates liquidity unlocking and enhanced capital efficiency.

### How does Pendle work?

Pendle operates on the Ethereum blockchain, leveraging smart contracts to manage transactions and yield tokenisation. Users deposit yield-bearing assets, which are divided into Principal Tokens (PT) and Yield Tokens (YT). These tokens can be traded, allowing users to fix their yield by selling YT for upfront returns or to speculate on future yield changes. Pendle uses a specialised Automated Market Maker (AMM) designed for time-decaying assets, ensuring accurate pricing and reducing the risk of liquidity drain from arbitrage.

### What are the potential use cases for Pendle?

Potential use cases for Pendle include:
- **Fixed Income for Investors:** Investors can secure stable yields by locking in current rates through the sale of Yield Tokens.
- **Yield Speculation for Traders:** Traders can speculate on future yield rates by trading Yield Tokens.
- **Yield Hedging for Risk Management:** Users can hedge against yield volatility by selling Yield Tokens while maintaining the principal ownership.
- **Enhanced Liquidity Provision:** By tokenising yields and employing AMM, Pendle users can optimise yield and liquidity provision.

### What is the history of Pendle?

Pendle was launched in June 2021 by a team including founder and CEO TN Lee. Initially, it faced challenges with adoption and system operations. However, the launch of Pendle V2 in December 2022 marked a significant improvement, leading to a substantial increase in total value locked (TVL) and trading volume. Pendle has secured $3.7 million in funding and has expanded its operations to Ethereum Layer 2 networks, such as Arbitrum. Its development has been supported by novel AMM solutions and strategic partnerships with platforms like Amber Group and Lido Finance.

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