Announcing the First Leveraged Liquid Staking Tokens Strategy on Pendle
We’re thrilled to announce that Stella has successfully integrated with Pendle’s cutting-edge leveraged LP Strategy for Liquid Staking Tokens (LSTs), and is now live on the Arbitrum mainnet.
With Stella, users can now easily access a streamlined strategy for leveraging Pendle’s Automated Market Maker (AMM) on LST with minimal impermanent loss, all while using single-sided ETH. Explore the Hypernova Upgrade today by engaging in lending or leveraging activities through Stella’s Hyper-Strategy and Hyper-Lending Pool.
Read on to discover how Leveragoors and Lenders can enjoy this new leveraged strategy experience with Pendle’s LST LP.
How Pendle Works
Before diving in, we strongly recommend familiarizing yourself with the workings of Pendle to make the most of this integration. You can find comprehensive information about Pendle here.
To provide you with a brief overview, there are 2 key aspects of Pendle that you should know before utilizing Stella:
1. Yield Tokenization
- Typically, when a user stakes tokens, such as ETH, within a DeFi protocol, they are granted stETH, symbolizing their yield-bearing position.
- However, in Pendle, this yield-bearing position is wrapped to wstETH and can be split into two components:
- PT wstETH: representing the principal amount. (Stella focuses only the PT Tokens)
- YT wstETH: representing just the yield of the position - 1 PT grants the holder the right to redeem 1 unit of the underlying asset upon maturity.
- Because PT wstETH does not include the yield component, PT wstETH will always be cheaper than 1 ETH.
2. Pendle AMM
- Users can buy or sell Principal Token (PT) on the Pendle AMM where price is determined by market demand and supply.
- After acquiring 1 PT wstETH at a discounted price (ex. 0.96ETH), user can later redeem 1 ETH for their PT wstETH upon maturity, ensuring them a fixed return.
- Buying and holding PT until maturity = receiving fixed yield.
- With Pendle’s V2 AMM, enables users to experience minimal IL. This is because PT price essentially appreciates towards its underlying asset over time, thereby mitigating time-dependent IL.
- If liquidity is provided until maturity, an LP’s position will be equivalent to fully holding the underlying asset.
Although Stella has strategically established a 30-day maturity date for the leveraged positions, the impact of IL remains minimal due to the appreciating nature of PT tokens. As a result of integrating with Pendle, Stella now enables users to tap into Pendle’s AMM, unlocking the potential for enhanced yield from both fixed PT tokens and yield-bearing positions, all while mitigating IL. Additionally, users can earn extra rewards from Pendle by participating in liquidity provision within Pendle’s AMM.
Leveragoors can take advantage of this opportunity with single-sided ETH by supplying only ETH and borrowing additional ETH from the Hyper-Lending Pool to open leveraged positions, ultimately optimizing capital efficiency.
What’s Available At Launch
At launch, Leveragoors can expect 1 new Hyper-Strategy LP to open leveraged positions and 1 new Hyper-Lending Pool:
New Hyper-Strategy LP:
- wstETH
New Hyper-Lending Pool:
- ETH
Stay tuned for the upcoming listing of the Penpie boosted version for these pools next week!
Leveragoors Guide To Hypernova: Taking Leverage on Pendle LST LP
1. Select Hyper-Strategy Pool
2. Supply and Borrow ETH
The process works similarly to other leveraged strategies. Users can input the amount of ETH they want to supply then can either choose:
- Borrow By Leverage: To select the level that Leveragoors want to leverage.
- Borrow By Amount: To select the amount Leveragoors want to borrow.
3. Claim Reward & Close Position
By opening leveraged positions on Pendle’s Hyper-Strategy LPs, Leveragoors will gain the benefit of earning additional PENDLE rewards from providing liquidity to Pendle’s AMM. Whereas, lenders in the standard lending pools, such as Uniswap V3, only receive the yield shared from the Leveragoors. Importantly, these rewards can be claimed at any time without the need for Leveragoors to close their positions.
Lenders Guide To Hypernova
1. Select Lending Pool with Hyper sign
2. Choose ‘Hyper-Pool’ pool Type and input the amount you want to supply
By selecting Hyper-Lending Pool, your liquidity will be strategically deployed within the Hyper-Strategy (e.g. Leveraged LST Pendle strategy) and Standard Strategy (e.g. Leveraged Uniswap V3 LP strategy on blue-chip assets).
Final Notes
Stella proudly stands as the pioneering customizable leveraged strategies protocol to build on top of Pendle’s innovative LP. This integration marks a significant milestone for Stella’s Hypernova upgrade, signifying its initial step to adopt trending narratives like LST and providing a new leveraged strategies opportunity to Leveragoors.
Explore this new leveraging and lending experience with maximum capital efficiency on LST pools through Stella here: https://app.stellaxyz.io/
About Stella Core Development Team
Previously as Alpha Finance Lab and Alpha Venture DAO, Stella core development team has pioneered in ‘leveraged DeFi’ since 2020. These developments include building the Alpha Homora, that has a peak TVL of $1.9B, first leveraged yield farming protocol, coming up and implementing key fundamental concepts such as tokenization and collateralization of LP tokens, and incubating a number of DeFi projects that went on to raise from top-tier VCs and list on tier-1 exchanges.
Under the new name (Stella) and the same token (ALPHA), the same core development team aims to double down on expertise in building an on-chain leveraged product. With Stella protocol that enables leveragoors to take leverage on various DeFi strategies with 0% cost to borrow and lenders to earn real yields without a maximum cap on lending APY, Stella aims to unlock highest yield potentials for DeFi users in this moderately low yield DeFi market.
