Over the past three to four years, hotspots in the crypto world have been switching like a revolving lantern: the Ethereum merge ignited the LSD track, airdropped points pulled everyone into a "rampant" craze, and now it's the stablecoin yield that has become the new focus. Bustling scenes are the norm, but after each voice fades away, you can always see Pendle standing in the center of the stage—quiet, yet steadily responsible for widening and deepening the backstage pipeline.

If the LSD craze of 2023 relied mainly on Lido for liquidity and Rocket Pool for decentralization, then it was only Pendle that supported the yield split and pricing; if the airdrop players of 2024 relied on Excel to track points and on Twitter for speed, it's still Pendle that directly prices the "future yield" using YT; by 2025, as stablecoin market capitalization continues to soar and yield-bearing dollars dominate the narrative, Pendle remains the largest secondary trading venue. Three market cycles, one thread—whoever masters the on-chain interest rate "unbundling" method will be able to secure a leading position in the next narrative.

From USDT to PT: Stablecoin + Fixed Income Dual Engine

Now when the industry discusses stablecoins, it's not just about USDT, USDC, and other "old money" but also about USDe, cUSD0, and other new yield-bearing faces. The data is straightforward: in the past month, Pendle's TVL entered the second gear acceleration: on August 9, hitting a record high of 8.2 billion, and further approaching 9 billion on August 13. More importantly, the fund's "inflow force"—Aave quietly raised the PT-USDe (Sep 2025) position limit by another 600 million this week, and it was filled in less than an hour, showing that institutional and whale demand for PT has not been diverted but rather strengthened.

Many still see Pendle as the "airdrop points paradise," but they have long changed tracks. The naming of PT/YT transitioned to a more understandable format starting in June of this year, and the frontend clearly explains that "1 PT redeems the principal at maturity, and 1 YT accumulates all the yield," so newcomers can understand without needing to ask Telegram groups. The backend also added daily reminders of position changes and received yields, with a pop-up message as soon as you open the website to inform you.

On the TradFi side, the Citadel and Edge Capital collaboration. This four billion dollar hedge fund packaged its mEDGE strategy pool into PT and directly threw it into Pendle, where mEDGE's TVL has already exceeded tens of millions of dollars. On the other hand, Spark's stablecoin USDS saw an inflow of over a hundred million in 24 hours, with just Spark's 25x points attracting a group of yield farmers, pushing the USDS TVL on Pendle to over two billion. The accompanying lending market is also robust, with the total PT circulating in Aave exceeding billions of dollars—the fixed income is indeed starting to "turn into money."

Why is PT More "Resistant to Market Movement": A Case Study of Liquid Leverage Event

On July 29, Ethena introduced Liquid Leverage to Aave: users collateralized 50% USDe + 50% sUSDe, stacked borrowing rates and promotional rewards, creating a more "market-driven" earning path. On the day of the launch, the market indeed discussed whether this would squeeze PT. The actual result was that Aave's PT-USDe limit increase was immediately taken up, and within the Liquid Leverage's earning structure, part of the rewards comes from the ENA ecosystem, making it more sensitive to market conditions and event intensity; in contrast, PT's return is secured through a discount lock, resulting in lower exposure to volatility. In other words: LL is like a "sports drink," while PT is more like "plain water + time deposit" — the former is more aggressive during events, whereas the latter is more stable after the event frenzy.

Citadels: Turning DeFi Fixed Income into an Empire

Simply put, Citadels is Pendle's "go-out" strategy: on one hand, attracting traditional capital, and on the other hand, entering new public blockchains. Compliance, KYC, RWA, Solana, TON... may sound complex, but the core logic is straightforward: taking the PT/YT interest rate puzzle to more environments, allowing any yield-producing asset to find a price on Pendle. If the old Pendle was like a side quest-filled dungeon, Citadels aim to turn the main city into a financial empire, where anyone wanting to issue stablecoins, engage in RWA, or conduct funding rate hedging must first come here and register.

Institutionalizing PT and Cross-Chain PT: The Next Steps

Pendle's Citadels is not a "website with a new name," but three real distribution channels:

(1) Non-EVM PT Expansion: Bringing PT to Solana / TON / HYPE and other high-throughput ecosystems to expand the user and asset pool reach;

(2) KYC Compliant PT: Targeting institutional wallets and brokerage interfaces, packaging on-chain fixed income into "compliant-holdable" assets;

(3) Direct Strategy Integration: For instance, Edge Capital's mEDGE has directly minted its strategy library as PT for distribution on Pendle, providing a bridge between "institutional strategies × DeFi fixed income." In simple terms: one PT, walking on two legs (cross-chain & institutional), placing the "interest rate puzzle" in more market fronts.

Why Pencosystem?

Pencosystem: What Happens After Unbundling Yield

For protocols, Pendle has never been merely a "tokenizing yield" tool, but rather an engine that synchronously amplifies TVL, liquidity, and market signals. Once a pool is launched, single-sided AMM + impermanent loss protection (if held to maturity) directly retains LPs; PT discount and YT premium then become a 24/7 price discovery dashboard, enabling teams to continuously monitor external capital inflows. EtherFi serves as the prime example—within less than six months of eETH being listed on Pendle, the protocol's TVL skyrocketed by 15x; the previously stagnant OpenEden also experienced a 45% growth in one month post-pool deployment. In short: Pendle wins, and the underlying protocol wins along with it.

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The magic of Pendle is not overly complex: it involves splitting an interest-bearing asset into fixed income and variable income halves. PT acts like a one-year dollar bond, providing a steady 3-12% APY upon maturity; YT, akin to an interest rate swap with an option, involves betting on airdrops, the Fed, and funding rates—it's all up to YT. Once unbundled, the market naturally arbitrages the spread—deeper PT discounts imply more attractive locked-in yields, while higher YT premiums indicate expectations of future reward distributions.

Don't underestimate this split—it enables LPs to earn fees by depositing a single asset, virtually eliminating impermanent loss, and even allows the use of the unbundled PT to lever up in Aave. Major players often utilize 3-5x leverage to boost their conservative APY to 25-30%, all meticulously recorded on-chain, enabling even a sell-side analyst to reproduce the Excel template.

From the end of 2023 to the present, Pendle has navigated through 27 significant maturity events, with 7 single events exceeding a billion. The largest redemption in June of last year amounted to 38 billion USD, promptly settled on-chain; on May 29th this year, a 16 billion redemption saw TVL drop from 47.9 billion to 42.3 billion, rebounding to 44.5 billion within a week, retaining a stable 93% rate. This capital isn't returning out of thin air—35% of the maturity capital is promptly rolled over into new Pendle pools, establishing the most favorable seven-day retention record in history.

Stablecoin Launchpad

A stablecoin is the most direct and rewarding character in the Pendle story. PT embeds a 3–12% fixed annualized rate into the on-chain contract, while YT bundles the "suspense" of future rates, airdrop points, and funding rates all at once for speculators. The result is that the new dollar comes with two product lines from the start: stable interest + high volatility bet.

Data is most convincing: Before USDe hit 1 billion TVL, half of it was locked in Pendle, and even as it approached nearly 6 billion, it still maintained a 40% share. cUSD0 remained stagnant for three weeks but saw a 45% growth within a month of joining Pendle. The latest USDS absorbed 100 million dollars within just 24 hours. Liquidity retention is equally impressive: during the recent peak of 16 billion dollars expiring on May 29, the TVL related to USDe only dropped by 6%, which was replenished within four days. For any stablecoin, nothing impresses institutional wallets more than "funds still returning after the peak."

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Over the past year, if any income-generating stablecoin wanted to increase TVL, the "Pendle Pool" would be written into the launch section of their whitepaper. OpenEden cUSD0 was originally stagnant in growth but saw a straight 45% increase within less than a month of joining Pendle. It has now become the default script for anyone wanting to launch a new dollar: hand over price discovery and early liquidity to Pendle first.

If we zoom out a bit more, stablecoins themselves are also part of a major trend of structural expansion. According to Modular Capital's report "Pendle: Era of Stablecoin Expansion," global stablecoin supply has surpassed 250 billion dollars, and income-generating stablecoins have grown in just eighteen months from less than 15 billion to 110 billion dollars, increasing their share from 1% to 4.5%. The same report also provides a scenario calculation: with the implementation of the "GENIUS Act" and the Federal Reserve maintaining a relatively high interest rate, the stablecoin market is expected to double in the next 18–24 months to 500 billion dollars; of which 15% or 75 billion dollars will flow to income-generating products.

If Pendle can maintain its current approximately 30% market share as a "Stable Share," it means that its TVL has the opportunity to rise to $20 billion, with an annual income of around $200 million based on a 100bp fee rate—just as Modular Capital concludes: in the DeFi fixed-income lane, Pendle is likely to enjoy a dual valuation anchor of "U.S. Treasury Bonds + Nasdaq Growth Stocks."

PT Is Growing into an Economic Belt

Over 80% of today's Pendle TVL is in U.S. dollar assets, suitable for both bull and bear markets. The circulating supply of PT in the Aave, Morpho, and Euler money markets has doubled in six months, surpassing $2 billion. Meanwhile, more LPs are starting to roll over their maturing LP directly into the next term, causing the new TVL to "flow in" even faster.

Replaying the market dynamics since July 29, PT's APY still significantly outperforms a collateral portfolio relying solely on borrowing and lending spreads. There are two reasons for this: firstly, PT's "coupon rate" is locked in at a discounted rate, unaffected by the lending side's fund availability and promotion intensity; secondly, PT can engage in collateral recycling in money markets like Aave, generating a "fixed coupon rate × leverage" composite return that is not inferior to traditional collateral. The Aave community risk report also shows that PT's collateral supply surged to billions of dollars within a month, demonstrating demand resilience.

The Era of Interest Rates Has Just Begun

Airdropped tokens can briefly boost market sentiment, but what truly attracts large capital is always "certain yield, sufficient liquidity, and comprehensive derivatives." Traditional finance has a $600 trillion interest rate derivatives coverage, while DeFi lags far behind, not to mention that the actual traded yield in the industry is less than three percentage points. What Pendle has done in these three years is slowly fill in that 97% gap.

Pendle's rise proves two things: on-chain settlement of billion-dollar principal at maturity is safe, and liquidity can be maintained during market cooldown. More importantly, it has shifted the interest rate value chain from "project team's closed-door pricing" to on-chain public auction, letting the market speak for itself in survival of the fittest. Going forward, as long as there is yield, there will be people doing PT/YT; as long as there are yield splitters, it will be challenging to leave Pendle's ecosystem. Airdrop seasons and copycat seasons may pass, but the interest rate market has just opened for business, so buckle up— the movie is only halfway through.

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