Pendle x [Redacted] Takes Flight
Fret not, Ethereum users, we’re back!
The Pendle team has had a heavy focus on Avalanche development in the past few months, but as our platform matures, we’ve had time to cook up something new for our OG Pendies on Ethereum.
Ethereum has always been the premier hotbed for innovation in the crypto space, with promising and exciting projects popping up on a regular basis.
[Redacted] Cartel checks all these boxes, and then some.
[Redacted] Cartel
Calling the Cartel “just another Ohm fork” would be doing it an injustice.
[Redacted] aims to aggregate voting power by bonding governance tokens like CRV and CVX through Ohm-like mechanics, minting BTRFLY at a discount. Users can then stake BTRFLY, receiving xBTRFLY in return and earning rebase rewards.
Pendle will be supporting wxBTRFLY, which is wrapped xBTRFLY. You can wrap your xBTRFLY here.
Pools go live on 24th February, 2pm UTC.
What can Pendle do for your wxBTRFLY?
Pendle enables users to split their yield-bearing wxBTRFLY tokens into separate yield and ownership components, known as YT (yield token) and OT (ownership token).
By separating the yield from the principal, users can then bet on or hedge against the APY of [Redacted]. Users can also provide liquidity to Pendle LP pools to earn additional yield.
We’ll briefly explain how some of these strategies work, and then give a tutorial on how to execute them.
Fixed Yield
You can fix your wxBTRFLY yield by holding OT-wxBTRFLY. Each OT represents ownership of 1 BTRFLY worth of wxBTRFLY, minus the yield.
OT always trades at a discount to the underlying asset. The size of the discount correlates to the APY of [Redacted], so the higher the yield, the larger the discount on OT.
OT is redeemable 1:1 for the underlying asset after expiry of the OT contract. If you hold 10 OT-wxBTRFLY, you will be able to redeem 10 BTRFLY worth of wxBTRFLY, regardless of the price at which you acquired OT.
By acquiring OT when [Redacted] APY is high, you can lock in the discount created by the high APY and essentially earn a fixed yield on your wxBTRFLY. This strategy acts as a hedge against [Redacted] APY.
Compounded Yield
If you are bullish on [Redacted] APY, you can bet on the yield instead by holding YT-wxBTRFLY.
Each YT entitles the holder to the future yield generated by 1 BTRFLY worth of wxBTRFLY, up till the expiry of the YT contract. The yield is accrued in real-time, and can be claimed at any time on the Dashboard.
YT also trades at a discount to the underlying asset, and the price of YT correlates to the APY of [Redacted]. The higher the yield, the higher the price of YT.
Since YT costs less than the underlying asset, you can buy a greater quantity of YT, compounding your exposure to the yield of wxBTRFLY.
If the [Redacted] APY increases, a YT holder would enjoy profits that are several times higher than a wxBTRFLY holder, thanks to the lever effect, without any borrowing at all.
How to get YT and OT
Mint YT and OT by depositing wxBTRFLY into Pendle. Remember, since YT and OT are minted by depositing 1 BTRFLY (denominated in wxBTRFLY), the value of YT + OT = 1 BTRFLY.
Then, simply convert YT to OT by selling YT and buying OT, or vice versa, depending on which strategy you want to employ.
You can also buy YT or OT with USDC directly through the respective liquidity pools.
Liquidity Mining
If you do not want to speculate on yields, you can simply use Pendle to earn some extra yield as icing on top of your wxBTRFLY cake.
By providing liquidity for the YT and OT pools, you will collect swap fees, as well as liquidity incentives, distributed every epoch (weekly on Thursday, 12am UTC). Swap fees are distributed in the form of LP tokens, while incentives are accrued in PENDLE, which can be claimed from the Dashboard.
To LP, simply mint YT and OT, then provide liquidity to the respective pools on the Farm page.
Exiting from your positions
To exit from your YT and/or OT positions, you can either sell for USDC in their respective pools, or redeem for wxBTRFLY.
To redeem before expiry, you will need to burn equal quantities of YT and OT. After expiry, you only need OT for redemption.
Cheatsheets
To assist you in your Pendle adventures, we have a few cheatsheets that contain concise summaries about yield trading strategies. Do take a few minutes to read through them to fully understand how to use our app.
The BTRFLY Effect
We hope that this is just the first step in the lasting and fruitful partnership between the Pendle team and the wonderful [Redacted] team.
If you have any questions regarding Pendle and what we do, please head over to our Discord, where our team and community will be glad to help.
