TIME VALUE OF INTERNET MONEY

Summary from the TLDR Crypto newsletter

Pendle adapts traditional coupon‐stripping to crypto by wrapping yield‐bearing tokens into SY and splitting them into principal tokens (PT) for fixed‐yield bets and yield tokens (YT) for variable‐rate speculation. By integrating point‐farming campaigns, its TVL exploded from $230 M to nearly $6.7B in early 2024, settling around $2.9B today. Unlike government‐set rates, crypto yields derive mathematically (e.g., Ethereum staking and Solana inflation), so pricing PT and YT demands a framework that accounts for variable rates, AMM liquidity dynamics, and point‐driven volatility. Tailored risk management tools, including dynamic LTV curves, liquidity penalties, and collateral valuation models, are required to safely integrate Pendle's fixed-income primitives into DeFi protocols.