Basis Trade of the Year: PT-sUSDe & PT-USDe

Published in
3 min readMay 29, 2024

The Time Machine adds more assets to its repertoire, this time in the form of USDe (from Ethena Labs) as a PT asset (from Pendle) with the inclusion of PT-sUSDe and PT-USDe! Composability in DeFi enables this loop and non-liquidatable loans in Timeswap supercharge this.

What is Ethena?

Ethena is a synthetic dollar protocol built on Ethereum that provides a crypto-native solution for money not reliant on traditional banking system infrastructure, alongside a globally accessible dollar denominated instrument — the ‘Internet Bond’.

The ‘Internet Bond’ combines yield derived from staked assets (e.g., staked Ethereum), to the extent used as backing assets, as well as the funding & basis spread from perpetual and futures markets, to create the first onchain crypto-native solution for money.

With this vision, Ethena has become one of the fastest growing protocols, with over $2.9 billion in TVL.

Source: Defillama

In the form of PT assets, USDe can now be used to leverage capital in a non-liquidatable fashion on Timeswap!

Synthetic Dollar enabling Real Yield

The Timeswap AMM, owing to its oracleless design, is capable of creating money markets for any token pair. These isolated pools help borrowers unlock fixed-term, non-liquidatable loans by locking their collateral tokens. The lenders on the other hand get access to fixed yields.

With the new PT-sUSDE and PT-USDe pools, users can now safely leverage their assets without worrying about liquidation thresholds. You can now leverage your PT assets to earn up to 356% APR. Don’t believe us, check the maths yourself!

The strategy itself has 3 simple steps:

  1. Borrow stablecoins against your PT-sUSDe/PT-USDe collateral.
  2. Buy more PT-sUSDe/PT-USDe with borrowed stablecoins.
  3. Keep looping this way to achieve your desired leverage.

This yields sizeable yields on your initial capital investment. You can see the different scenarios below:

PT-sUSDe July — 356% APR

PT-sUSDe September — 301% APR

PT-USDe — 122% APR

You can check the strategies yourself, make a copy and then edit the sheet to see what your potential earning are!

Calculated on the PT-sUSDe July pool

This does not even include $TIME rewards! So, your actual yield is going to be much higher than this.

For those who prefer an even simpler strategy: just lend to earn yield! The leverage will surely push up rates to the point where you are comfy with the rates you are earning on.

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