Undoubtedly, Pendle is one of the most successful DeFi protocols in the current crypto cycle. While many protocols have stalled due to liquidity droughts and fading narratives, Pendle has distinguished itself through its unique yield-splitting and trading mechanism, becoming the “price discovery venue” for yield-bearing assets. By deeply integrating with stablecoins, LSTs/LRTs, and other yield-generating assets, it has secured its positioning as the foundational “DeFi yield-rate infrastructure.”

In our earlier research report “The Intelligent Evolution of DeFi: From Automation to AgentFi”, we outlined three stages of DeFi’s intelligence development: Automation, Intent-Centric Copilots, and AgentFi (on-chain autonomous agents). Beyond lending and yield farming—the two most valuable and accessible use cases today—we identified Pendle’s PT/YT yield-rights trading as a high-priority scenario for AgentFi adoption. With its architecture of “yield splitting + maturity mechanism + yield-rights trading”, Pendle naturally provides a programmable space for agents, enabling richer possibilities for automated execution and yield optimization.

Pendle is the first DeFi protocol dedicated to yield splitting and yield trading. Its core innovation lies in tokenizing and separating the future yield streams of yield-bearing assets (YBAs) such as LSTs, stablecoin deposit receipts, and lending positions. This enables users to flexibly lock in fixed income, amplify yield expectations, or pursue speculative arbitrage in secondary markets.

In short, Pendle has built a secondary market for the “yield curve” of crypto assets, allowing DeFi users to trade not only the principal but also the yield. This mechanism is highly analogous to the zero-coupon bond + coupon-splitting model in traditional finance, thereby enhancing pricing precision and trading flexibility for DeFi assets.

Pendle splits a yield-bearing asset (YBA) into two tradable tokens:

• PT (Principal Token, similar to a zero-coupon bond): represents the principal redeemable at maturity but no longer accrues yield.

• YT (Yield Token, similar to coupon rights): represents all yield generated before maturity, but expires worthless afterward.

• Example: depositing 1 ETH stETH produces PT-stETH (redeemable for 1 ETH at maturity, principal locked) and YT-stETH (entitles the holder to all staking rewards until maturity).

Pendle goes beyond token splitting by introducing a specialized AMM (Automated Market Maker) to provide liquidity for PT and YT, akin to a secondary bond market. Users can buy or sell PT and YT at any time to adjust their yield exposure. PT generally trades below 1, reflecting discounted principal value, while YT is priced based on the market’s expectations of future yield. Importantly, Pendle’s AMM is optimized for expiring assets, enabling PT and YT of different maturities to collectively form an on-chain yield curve—closely resembling bond markets in TradFi.

Within Pendle’s stablecoin markets, the difference between Stablecoin PT (fixed-income positions) and Stablecoin Pools (liquidity-mining positions) is critical:

• Stablecoin PT (bond-like position):  Functions as an on-chain bond. By purchasing PT at a discount, investors lock in a fixed rate, redeemable 1:1 at maturity. Returns are stable and risks are relatively low, making PT suitable for conservative investors seeking certainty.

• Stablecoin Pools (AMM liquidity position):  Function as yield-farming positions. LPs provide liquidity for PT and YT, earning trading fees and incentive rewards. Returns (APY) fluctuate significantly and carry impermanent loss (IL) risk, appealing more to active investors pursuing higher yields who can tolerate volatility.

Pendle’s PT/YT design supports four primary trading strategies that cater to different risk appetites:

• Fixed Income: Buy PT and hold to maturity to lock in a fixed yield.

• Yield Speculation: Buy YT to bet on rising yields or increased volatility.

• Curve Arbitrage: Exploit pricing differences across PT/YT maturities.

• Leveraged Yield: Use PT or YT as collateral in lending protocols to amplify returns.

Beyond Pendle V2’s yield-splitting mechanism, the Boros module further tokenizes funding rates, transforming them from a passive cost of perpetual positions into an independently priced and tradable asset. With Boros, investors can engage in directional speculation, risk hedging, or arbitrage opportunities. In essence, this mechanism brings traditional interest rate derivatives—such as interest rate swaps (IRS) and basis trading—into DeFi, providing institutional capital and risk-averse strategies with a new class of tools.

In addition to PT/YT trading, AMM pools, and Boros, Pendle V2 also offers several extended features that, while not the focus of this report, form important parts of the ecosystem:

• vePENDLE: A vote-escrow governance and incentive model. Users lock PENDLE to receive vePENDLE, which grants governance rights and boosts yield distribution—serving as the protocol’s long-term incentive and governance backbone.

• PendleSwap: A one-stop asset swap interface that enables efficient conversion between PT/YT and their underlying assets. Functionally a DEX aggregator, it enhances convenience and composability rather than introducing a standalone innovation.

• Points Market: A secondary marketplace for trading project points (e.g., loyalty or airdrop points). It mainly serves speculative and narrative-driven use cases, such as points arbitrage and airdrop capture, rather than core protocol value.

In traditional financial markets, retail investors are largely limited to equities and fixed-income products, with little access to higher-barrier instruments such as bond derivatives. The same dynamic exists in crypto: retail users are more familiar with token trading and DeFi lending. While Pendle has significantly lowered the entry barrier for “bond-derivative-like” trading in crypto, its strategies still require substantial expertise, as investors must analyze how yield-bearing asset rates shift across different market conditions.

Based on this framework, we argue that in different market phases—early bull market, euphoric bull market, bear market downturn, and sideways consolidation—investors should align their Pendle strategies with their own risk preferences.

• Early Bull Market: Risk appetite begins to recover, lending demand and rates remain low, and YT is relatively cheap. Buying YT here is equivalent to betting on future rate increases. As borrowing demand and LST yields climb, YT appreciates, offering a high-risk, high-reward setup suited to investors seeking early positioning for outsized upside.

• Euphoric Bull Market: Surging market sentiment drives lending demand sharply higher, with DeFi lending rates rising from single digits to 15–30%+. YT valuations soar while PT trades at steep discounts. Buying PT with stablecoins in this phase locks in high fixed yields at a discount—effectively a “fixed-income arbitrage” play that cushions volatility in late bull cycles. The trade-off: security of fixed returns at the cost of potentially larger gains from holding volatile assets.

• Bear Market Downturn: With sentiment depressed and borrowing demand collapsing, rates fall and YT approaches zero value, while PT behaves more like a risk-free asset. Buying and holding PT to maturity secures predictable returns even in low-rate environments, functioning as a defensive allocation for conservative investors.

• Sideways Market: Rates lack clear direction, market expectations are divided, and PT/ YT often display short-term mispricing. Investors can exploit these mismatches through inter-temporal arbitrage across different PT/YT maturities or by trading mispriced yield rights, generating stable spread returns. These strategies require sharper analysis and execution, but they can offer steady alpha in trendless conditions.

Overall, Pendle strategies lean toward stable yield generation, with the core logic being to balance risk and return across market cycles by buying PT, buying YT, or participating in stablecoin pools. For investors with higher risk tolerance, more aggressive strategies—such as shorting PT or YT to bet on rate movements or market mispricings—can be employed. These require sharper judgment and execution capabilities, and come with greater risk exposure. As such, this report does not expand on them in detail; a reference decision tree is provided below.

The above Pendle strategy analysis has so far been framed from a USD-denominated perspective, focusing on how to lock in high yields or capture rate volatility for excess returns. Beyond this, Pendle also offers BTC- and ETH-denominated strategies.

ETH is widely regarded as the best asset for coin-denominated strategies due to its ecosystem dominance and long-term value certainty. As Ethereum’s native asset, ETH underpins most DeFi protocols and generates a sustainable cash flow through staking yields. In contrast, BTC has no native yield, and its returns on Pendle depend primarily on protocol incentives, making its coin-denominated logic relatively weaker. Stablecoin pools, meanwhile, are better suited as defensive allocations—acting as “preserve & wait” positions.

Across different market cycles, the three pool types display distinct strategy characteristics:

• Bull Market: stETH pools are the most aggressive — YT positions amplify ETH accumulation via leveraged staking yields; uniBTC can serve as a speculative supplement; stablecoin pools lose relative appeal.

• Bear Market: Discounted YT in stETH pools offers the best ETH accumulation opportunity; stablecoin pools serve as the main defensive allocation; uniBTC is only suitable for small-scale short-term arbitrage.

• Sideways Market: stETH pools provide arbitrage potential via PT-YT mispricing and AMM fees; uniBTC fits short-term speculation; stablecoin pools act as a stable, low-volatility supplement.

Beyond PT/YT trading and AMM pools, Pendle has launched Boros, a dedicated funding-rate trading module. Boros effectively “tokenizes” funding rates—akin to importing interest rate swaps (IRS) and basis trading/carry trades into DeFi—transforming what is usually an uncontrollable cost into a tradable, configurable investment instrument. Its core primitive, the Yield Unit (YU), supports three major categories of strategies: speculation, hedging, and arbitrage.

• Speculation: Long YU (pay fixed, receive floating) to bet on higher funding rates; Short YU (receive fixed, pay floating) to bet on lower funding rates—similar to traditional interest rate derivatives.

• Hedging: Boros allows institutions with large perpetual positions to swap floating funding payments/receipts into fixed cash flows.

  • Funding Cost Hedge: Long Perp + Long YU → lock floating funding payments into fixed costs.

  • Funding Income Hedge: Short Perp + Short YU → lock floating funding income into fixed revenues.

• Arbitrage: Investors can build delta-neutral enhanced yield or arbitrage/spread trades by exploiting mispricings across markets (Futures Premium vs. Implied APR) or across maturities (term arbitrage).

Overall: Boros is designed for professional capital, with primary value in risk management and steady yield enhancement, but limited retail friendliness.

Boros Strategy Matrix:

As outlined earlier, Pendle’s trading strategies essentially function as complex bond derivatives. Even the simplest approach—buying PT to lock in fixed yield—still involves multiple layers of consideration, including rollover at maturity, interest rate fluctuations, opportunity cost, and liquidity depth. More advanced strategies, such as YT speculation, term arbitrage, leveraged combinations, or dynamic comparisons with external lending markets, add further complexity. Unlike lending or staking products, where users can “deposit once and earn continuously” with floating returns, Pendle’s PT (Principal Token) must carry a fixed maturity (typically several weeks to months). At maturity, the principal redeems 1:1 into the underlying asset, and a new position must be established to continue earning. This periodicity is a structural necessity of fixed-income markets, and represents Pendle’s fundamental distinction from perpetual lending protocols—certainty comes with the constraint of maturity.

Currently, Pendle does not provide a native auto-rollover feature. Instead, some DeFi strategy vaults offer Auto-Rollover solutions to balance user experience with protocol simplicity, typically in three forms:

• Passive Auto-Rollover: Simple logic—when PT matures, the vault automatically reinvests principal into a new PT. This delivers a seamless user experience but lacks flexibility. If lending rates on Aave or Morpho rise above Pendle’s fixed rate, forced rollover creates opportunity cost.

• Smart Auto-Rollover: The vault dynamically compares Pendle’s fixed rate with floating lending rates, avoiding “blind rollover” and achieving better yield optimization with flexibility:

  • If Pendle fixed rate > floating lending rate → reinvest into PT, locking in higher certainty.

  • If floating lending rate > Pendle fixed rate → allocate to Aave/Morpho to capture higher returns.

• Hybrid Allocation: A split strategy, with part of the capital in PT for fixed yield and part in lending markets for floating yield. This balances stability and flexibility, reducing the risk of being disadvantaged under extreme rate environments.

This is precisely where AgentFi adds unique value: it can automate these complex rate arbitrage dynamics. Pendle’s fixed PT rates and external floating rates fluctuate in real time, making continuous manual monitoring and switching impractical. While passive Auto-Rollover offers only mechanical reinvestment, AgentFi can dynamically compare rates, auto-adjust allocations, and optimize portfolios according to each user’s risk preferences. In more advanced use cases, such as Boros strategies, AgentFi can also manage funding rate hedging, cross-market arbitrage, and term-structure trades—further unlocking the potential of professional-grade yield management.

In our previous AgentFi research report “The New Paradigm of Stablecoin Yields: From AgentFi to XenoFi”, we introduced ARMA(https://app.arma.xyz/), a stablecoin yield optimization agent built on Giza’s infrastructure layer, which empowers the creation of financial agents across diverse use cases. ARMA, deployed on Base, reallocates funds across AAVE, Morpho, Compound, Moonwell, and other lending protocols to maximize returns — establishing itself as the first lending-focused AgentFi product and a long-standing leader in the sector. Giza is an infrastructure 

In September 2025 the Giza team launched Pulse Optimizer(https://app.usepulse.xyz/), the industry’s first AgentFi automation system for Pendle’s fixed-yield PT markets.  Unlike ARMA, which targets stablecoin lending, Pulse focuses on Pendle’s fixed-income opportunities: it leverages deterministic algorithms (not LLMs) to continuously monitor multi-chain PT markets, dynamically reallocates positions via linear programming while factoring in cross-chain costs, maturity management, and liquidity constraints, and automates rollovers, cross-chain transfers, and compounding. Its goal is to maximize portfolio APY under controlled risk, abstracting the complex manual process of “finding APY / rolling maturities / bridging / timing trades” into a one-click fixed-income agent experience.

• Data Collection: Continuously tracks multi-chain Pendle markets, including active markets, APYs, maturities, liquidity depth, and bridge fees, while modeling slippage and price impact to provide accurate inputs for optimization.

• Wallet Manager: Acts as the operational hub, generating portfolio snapshots, standardizing cross-chain assets, and enforcing risk controls (e.g., minimum APY improvement thresholds, historical value checks).

• Optimization Engine: Uses linear programming to model allocations across chains, integrating capital distribution, bridge fee curves, slippage costs, and market maturities to output optimal strategies under risk constraints.

• Execution Planning: Converts optimization results into transaction sequences, including liquidating inefficient positions, planning bridges/swaps, rebuilding positions, and triggering full portfolio exit if needed — forming a closed optimization loop.

Pulse currently focuses on ETH-denominated yield optimization, managing ETH and liquid staking derivatives (wstETH, weETH, rsETH, uniETH, etc.) across multiple Pendle PT markets. The system uses ETH as the base asset, handling cross-chain token conversions automatically to achieve optimal allocation. Pulse is live on Arbitrum mainnet and will expand to Ethereum mainnet, Base, Mantle, Sonic, and more, with Stargate integration enabling broader interoperability.

User Experience Flow

• Agent Activation & Fund Management: Users can activate Pulse at www.usepulse.xyz with one click. The process includes wallet connection, Arbitrum network verification, allowlist confirmation, and a minimum initial deposit of 0.13 ETH (~$500). Once activated, funds are automatically deployed into the optimal PT markets, entering continuous optimization cycles. Users can add funds at any time, triggering rebalancing and reallocation; no minimum applies for subsequent deposits, though larger capital improves diversification and efficiency.
  

• Dashboard & Performance Monitoring: Pulse provides a full analytics dashboard to track investment performance in real time:

  • Key Metrics: Total balance, principal invested, cumulative returns, and allocation across PT tokens and chains.

  • Yield & Risk Analysis: Trends at daily/weekly/monthly/yearly horizons; real-time APR monitoring, annualized projections, and benchmark comparisons to assess agent outperformance.

  • Multi-Layer Views: By PT tokens (PT-rETH, PT-weETH, etc.), underlying LST/LRT assets, or cross-chain allocations.

  • Execution Transparency: Complete logs of all agent actions — timestamps, operations, fund sizes, yield impacts, on-chain hashes, and gas costs.

  • Optimization Impact: Metrics on rebalancing frequency, APR improvements, diversification, and market responsiveness, benchmarked against static strategies to reflect true risk-adjusted performance.

• Exit & Withdrawal: Users can deactivate Pulse at any time. The agent liquidates PT positions, converts them back to ETH, and returns funds to the user’s wallet. Only a 10% success fee is charged on profits (principal is fully returned). Clear breakdowns of yields and fees are shown before exit, with withdrawals usually processed within minutes. Users may reactivate anytime with preserved historical performance records.

In September 2025, Giza launched Swarm Finance — an incentive distribution layer purpose-built for Active Capital. Its mission is to connect protocol incentives directly to agent networks via standardized APR feeds (sAPR), effectively making capital “intelligent.”

• For Users: Funds are automatically and optimally allocated across chains and protocols in real time, capturing the best yields without manual monitoring or compounding.

• For Protocols: Swarm Finance solves Pendle’s “maturity-driven TVL churn” by enabling automatic rollovers, delivering stickier liquidity, and lowering governance overhead for liquidity management.

• For Ecosystems: Capital flows faster across chains and protocols, enhancing efficiency, price discovery, and utilization.

• For Giza: Incentive flows routed through Swarm Finance feed back into $GIZA tokenomics via fee capture and buyback mechanisms.

According to Giza, when Pulse launched ETH PT markets on Arbitrum, it delivered ~13% APR, More importantly, Pulse’s automated rollover mechanism resolved Pendle’s TVL churn problem, creating more stable liquidity growth. As the first live application of Swarm Finance, Pulse demonstrates the power of agent-driven optimization and signals the beginning of a new paradigm for Active Capital in DeFi.

As the first AgentFi product built on Pendle PT strategies, Pulse marks a milestone for both Giza and the broader AgentFi sector. By abstracting complex PT fixed-income trading into a one-click agent experience, it lowers the user barrier significantly while boosting Pendle’s liquidity efficiency.

That said, Pulse remains early-stage, focused primarily on ETH PT strategies. Looking ahead, we anticipate:

• Stablecoin PT AgentFi products — catering to more risk-averse investors.

• Smarter Auto-Rollover — dynamically comparing Pendle fixed yields with lending market floating rates for more flexible optimization.

• Cycle-Aware Strategy Coverage — modularizing Pendle strategies for bull/bear/sideways markets, including YT, stablecoin pools, shorts, and arbitrage.

• Boros-Integrated AgentFi products — enabling smarter delta-neutral yields and cross-market/term arbitrage beyond what Ethena offers today.

Of course, Pulse faces the same risks inherent to any DeFi product, including protocol and contract security (potential vulnerabilities in Pendle or cross-chain bridges), execution risks (failed rollovers at maturity or cross-chain rebalancing), and market risks (rate volatility, insufficient liquidity, diminishing incentives). Moreover, Pulse’s returns are tied to ETH and its LST/LRT markets: if Ethereum’s price experiences a sharp decline, even an increase in ETH-denominated holdings may still translate into losses when measured in USD terms.

Overall, the launch of Pulse not only expands the boundaries of AgentFi but also opens new possibilities for the automation and scaling of Pendle strategies across different market cycles, marking an important step forward in the intelligent evolution of DeFi fixed income.

Disclaimer: This article was prepared with the assistance of ChatGPT-5, an AI-based tool. While the author has exercised due diligence in reviewing and verifying the accuracy of the information presented, inadvertent errors or omissions may remain. Readers are further advised that the fundamentals of crypto assets often diverge materially from their performance in secondary markets. The content herein is provided strictly for informational consolidation and academic or research discussion. It does not constitute investment advice, nor should it be construed as a recommendation to purchase or sell any digital tokens.