Pendle and the Qi Musketeers

Pendle Team

Published in

Pendle

3 min readNov 9, 2021

| Warp to V2.0!

Pendle’s integration with BENQI, the Iron Bank of Avalanche is complete!

As a leading DeFi protocol, BENQI currently holds over $2.8 billion of liquidity.

Pendle will be supporting 2 qiTokens at launch: qiAVAX and qiUSDC. BENQI users will be able to lock yields, build leveraged yield exposure, and purchase the underlying assets at a discount.

Yield Mechanics

The utility of Pendle is simple. Split qiTokens into two: Ownership Tokens (OT) and Yield Tokens (YT).

OT tokens represent ownership of the underlying qiToken and will receive the liquidity incentives for staking.

YT tokens represent a claim on all future yield until the contract expiry, as determined by the lending rate on BENQI.

Something for everyone

Yield Bear

“Markets overleveraged and this only ends one way. You think these DeFi yields are sustainable? 3% is fair market value… anon this can’t continue.”

If you identify with this statement, hedging is for you! Yield bears will be able to lock in their yield by minting and selling YT, receiving USDC immediately. They essentially collect their earnings upfront, taking advantage of current high yields and gaining cash flow to redeploy.

Yield Bull

“We’re in a supercycle. Who would lock in those yields now? Let's lever up, yields will go to 20 like during DeFi summer. Shun the nonbelievers… shun…”

Yield-bulls will be able to create large exposure to yield by simply buying YT. Due to the relatively small cost of YT compared to buying the entire underlying asset, buyers can gain much more yield exposure with the same amount of capital. More yield exposure without liquidation risk!

Value Bull

“Avax bull bull bull. Avax $1000 by 2023 see you on the summit. How can I accooomulate more now? “

OT-qiAVAX always trades at a discount to AVAX. And at the end of the contract, it is redeemable for AVAX, guaranteeing the fixed % gain in AVAX.

This simple formula is for you dear ser:

$AVAX = OT-qiAVAX + YT-qiAVAX

For those in it for the ride, the same amount of capital spent on OT-qiAVAX now will guarantee you more AVAX in the future, compared to just buying AVAX spot!

If OT-qiAVAX is trading at a 30% discount to AVAX, you can purchase it now and redeem an equal amount of AVAX upon expiry.

$WEN

These building blocks will go live on 11 Nov 2021. Stay tuned for more updates on our Discord and Twitter. We’re excited to see these primitives in action!

About BENQI

Built on Avalanche’s highly scalable network, BENQI’s vision of bridging decentralized finance (DeFi) and institutional networks starts by launching BENQI on the Avalanche C-Chain. Through BENQI, Avalanche users will be able to earn interest on their assets, obtain credit through over-collateralized loans and earn QI governance tokens as rewards for participating in the protocol.