Crypto and the world of disinfeed finance (Defi) are constantly seen to be new innovations. One of these is the Pendle Protocol, which provides the facility of “Future Yield” ie Future Earnings and Trades for Crypto investors. This concept not only Cryptocurrency In investment methods changes, but also affects the functioning of financial markets. But when it comes to a new protocol, the first question arises, is it safe?
In this blog, we will get information about the way the work of Pendle Protocol, its security, its possible advantages and risks.
What is Pendle and how does it work?
Pendle is a Defi Protocol that allows you to convert your future yield into separate tokens and immediately convert it into cash (liquidity). It is specifically designed for assets that lose their value over time. The native token of Pendle Protocol is Pendle Crypto.
Pendle makes two types of tokens:
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Yt (submit token): Shows future earnings
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Pt (most important token): The original asset indicates the ownership
For example, if you locked Eth in a protocol and give 10% annual return, Pendle Toks the return to YT, which you can sell or hold separately.
The biggest advantage of this system is that users can divide their assets into different parts, adopt different strategies such as one part to raise funds by selling future earnings and holding another part.
Pendle’s Amm and Generation Decay support for assets
Pendle has developed a special computerized Marketplace Maker (AMM) that supports the “Time Decay” assets. General AMMS such as Uniswap or Sushiswap cannot value future earnings properly, as they do not change over time.
The amm of Pendle solves this problem and manages the value of such assets in a better way.
Benefits of amm:
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Accurate Pricing: The yield decreases over time, Pendle takes care of it.
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Liquidity: Creating a transparent market for both YT and PT tokens.
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Optionality: If users want, hold, sell or do derivative trading from it.
This is a new use of Pendle in a unique Amm Defi space that separates it from other platforms.
How safe is Pendle? Analysis of safety
Pendle’s security strategy is based on several levels:
Smart Contract Audits: All the smart contracts of Pendle have been audited by the major security firms of the industry. The aim of these audits is to identify and fix the weaknesses of the code.
Reactive and proactive security: Pendle has faced a security lapse in the past, but after that the protocol has further strengthened its security policy. Now they are taking many steps such as regular code review, automated monitoring and monitoring user transactions.
Open-source transparency: Pendle’s code is public on Github. This means that any developer or security researcher can review it. From this it is clear that the protocol does not hide, but prioritize transparency.
Community Participation: Pendle believes in active interaction with the community of its users and developers. Security suggestions are taken seriously and the participation of the community is preferred.
Although no protocol is 100% safe, these steps adopted by Pendle make it relatively safe.
Benefits and Risk of Pendle
Benefit:
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Financial Flexibility: Users can cache their yield now
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New trading opportunity: Speculative Trading on YT/PT
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Increase in liquidity: Cash flow from blocked assets
risk:
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Market Voltiplicity: YT/PT prices depend on the market rate
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Smart Contract Risk: Bugle
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Complex Structure: It can be difficult for new users to understand
Users should carefully evaluate their risk profiles and investment strategies while taking decisions related to Pendle.
If you want to know about other crypto projects similarly, then click on the link Mission overview You can study in sex.
Conclusion
Pendle Protocol is a revolutionary initiative in the world of dysented finance, which gives users the opportunity to play freely with the future yields. Its unique AMM structure and smart toknagation technology makes it different from other defi projects.
As far as safety is concerned, Pendle has taken quite strong measures, steps such as audit, code transparency, monitoring and community participation make it relatively safe. Nevertheless, there is always a risk with investment in crypto. Before investing in Pendle, do Dyor (Do Your Personal Analysis). Step into the world of Pendle can be a new opportunity, provided you move forward with intelligence and information.
