🧐Why do I like Pendle? | Market Lesson 1: Returns are not gambled, but designed!
I've noticed that $pendle has been rising against the trend recently, and on-chain data suggests that there may be whales and institutions accumulating it. Coincidentally, today I want to talk about the topic of returns—
I don't know if you feel it too, but the current Crypto market is very much like Wall Street after the Great Depression of 1929: Meme coins are a carnival for speculators, various narratives are just institutional rhetoric, and 99% of retail investors are still struggling in the information gap.
Two years ago, when DeFi was just emerging, many people, like me, were obsessed with the cycle of "mining, withdrawing, and selling," chasing triple-digit APYs, until a series of liquidations made us realize the greatest tragedy for retail investors is—always swimming naked in someone else's rules.
So two questions arise—
If those concept projects lacking substantial support collapse one after another, do we have a protocol truly rooted in the essence of finance that can retain returns?
If returns can be sliced, hedged, or even shorted, why still entrust our fate to the unpredictable APY?
Management guru Peter Drucker said: "Strategy is not about predicting the future, but about deciding what to do now to have a future."
The essence of returns should be the precise design and continuous iteration of investment logic.
And @pendle_fi is the first I’ve seen in this round that systematically designs a predictable return model from uncertainty, which is why I have consistently used Pendle for financial management.
1⃣Pendle's Survival Philosophy: True Value is Control Over Returns
The underlying logic of Pendle is not complex: it splits income-generating assets (like staked ETH or stablecoins) into principal tokens (PT) and yield tokens (YT). The former locks in fixed returns, while the latter trades future cash flows. In traditional finance terms, PT is like a zero-coupon bond, and YT is akin to an interest rate swap contract.
For both individuals and institutions, return management is an eternal need. In Pendle, we should understand three key facts—
1) In traditional markets, the scale of interest rate derivatives exceeds $500 trillion, while the penetration rate of similar products in DeFi is only 3%. This gap represents Pendle's growth potential.
2) 90% of DeFi protocols cannot survive bull and bear markets, while Pendle's TVL grew 400% against the trend in a bear market, indicating that this market is essentially still fearful of volatility.
3) The entry of quantitative fund Fasanara Digital means institutional funds are quietly positioning themselves; this is not the end, but the beginning of traditional capital voting with their feet.
Most importantly, Pendle has reawakened the market's profound understanding of the essence of finance: true value is not the yield itself, but the control over the yield.
2⃣Pendle may be the best "asymmetrical weapon" for retail investors
In the crypto market, retail investors are always at the end of the information chain, following along to inflate bubbles. Pendle has chosen a completely different path—rather than creating bubbles, it puts reins on them.
When the LSD track collectively collapses in 2024, users holding PT through Pendle will remain unscathed. This serves as a warning:
Market volatility is unpredictable, and individuals find it hard to stand against the tide; you must learn to use "asymmetrical weapons" to leverage your position—
1) While others are anxious about the volatile prices in liquidity mining, you can lock in the absolute safety of your principal through PT. Regardless of how much returns decline in a bear market, it won't affect the yield you have already locked in, effectively giving you a "downside insurance" for free.
2) When the market panics and sells off, you can even collateralize PT to borrow assets and then buy the plummeting YT, betting on a rebound in interest rates. When FOMO returns to the market, you can sell YT to cash in on future returns.
Using fixed-income assets to leverage speculative returns—this is a game that only hedge funds can play in traditional finance.
3) You can also arbitrage during market stagnation. At one point, a certain exchange's SOL funding rate reached 0.3%, and Pendle's Boros module allows you to simultaneously go long on SOL funding rates and short on ETH funding rates, netting a 47% profit in three days, unbothered by the market's stagnation.
Thus, with Pendle as a weapon, retail investors gain the freedom to "design returns," which is no longer gambling but a precise probability game.
3⃣Beware of Pendle's "cognitive traps"
Many people view market returns as a gamble: betting on trends, chasing hot topics, and hoping for a blockbuster, as if success is merely a random event in a probability game. However, true market winners often subvert this understanding—
While others chase prices in the secondary market, the smart ones have already attacked from the dimension of interest rates.
Of course, Pendle is not perfect. As a real user, I must pour some cold water based on my personal experience:
1) Steep learning curve: Among current DeFi protocols, I believe Pendle's mechanism ranks among the top three in complexity. Understanding the pricing mechanism of YT requires patience to get through the "Interest Rate Swap Guide," which is not friendly for beginners;
2) Liquidity stratification: Popular asset pools (like ETH) have excellent depth, but long-tail assets may face slippage black holes.
3) The sustainability of high returns awaits long-term validation: Some high-yield pools rely on short-term market imbalances, and long-term returns may decline due to intensified competition or strategy failures.
But it is precisely these "flaws" that form Pendle's moat—it filters out speculators with complexity and solidifies long-term capital with real demand.
4⃣Conclusion—
Returning to the initial question, why do I like Pendle? Why do I keep using Pendle?
If you have also experienced the disillusionment and rebirth of DeFi, I believe you will agree with me—
1) Investment needs to shift from "yield worship" to "risk management"; PT is a bulletproof vest, and YT is a sniper rifle;
2) Investment should focus on "the underlying flow of funds" rather than "token prices"; institutions entering the market never look at Pendle's candlestick charts;
3) Ultimately, investment needs to be thought of from the dimension of interest rates, rather than just simple token prices.
Perhaps looking back in a few years, Pendle will be defined as "the starting point of DeFi 2.0": it does not create illusions of wealth but opens the arsenal of financial engineering equally to every ordinary person.
Only those who have been through countless trials in finance will realize that there is a survival gap between madness and rationality, which is the first lesson the market wants to teach us: true investment never requires a gamble!
The previous crypto space was indeed foolish; the interest rate market was nearly impossible to realize. Now, the crypto space is filled with actuaries who understand human nature. If you can grasp and master Pendle, it means you have already mastered 90% of DeFi and derivatives.
Therefore, I recommend every investor to experience @pendle_fi, whether you are a risk enthusiast or an arbitrage player. Try an interest rate swap, and you will surely find Pendle to be great, no need for further words!
You can first join Pendle's Chinese community to feel it out; there are many strategies about current financial management to learn from, and many experts are generously sharing: https://t.me/PendleFinance_CN
Finally, borrowing a slogan from a group friend—
Are we trading token prices/points/airdrops/expectations/debts?
No, we are trading dreams!
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