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Cap has updated our UI to allow users to directly trade Pendle PTs and YTs on the Cap App. Whether you are looking to lock in a fixed term by holding a PT or want to speculate on yield by holding a YT, this integration allows you to do so all without leaving our platform.
Pendle is a protocol that tokenizes yield into a trading layer for users to speculate and hedge on, letting anyone split a yield-bearing asset into two pieces, the PT & the YT, and trade them on their AMM.
PT (Principal Token)
Represents the principal and acts as a “zero-coupon bond.” PT can be bought at a discount and redeemed 1:1 for the accounting asset at maturity, enabling fixed yield.
YT (Yield Token)
Represents all future yield from the underlying until maturity. Hold YTs if you want floating yield exposure or to speculate on yields rising.
To put it simply, PTs are for users who are risk averse (since its a fixed yield) while YTs are for users who have a higher risk appetite (because yields are floating).
Cap is a stablecoin protocol powered by credible financial guarantees that has two core products: cUSD and stcUSD.
cUSD is a dollar-denominated stablecoin backed by a basket of regulated payment stablecoins such as USDC and redeemable 1:1 for any reserve asset.
stcUSD is the yield-accruing version of cUSD where yield is generated by an open market of operators made up of market makers, proprietary trading shops, etc. and underwritten by restakers.
Want an easier way to understand Pendle? Imagine you buy an apple tree that will grow for one season.
PT (Principal Token) is like owning the tree itself.
At the end of the season, you know for sure you’ll still have the tree, and it can always be traded back for 1 full tree (like redeeming 1 PT for 1 stcUSD).
Buying the tree at a discount now and redeeming it later gives you a predictable, fixed return like a guaranteed harvest value.
YT (Yield Token) is like owning the rights to the apples the tree produces.
You don’t own the tree, but you get to collect all the apples it drops until the season ends.
If the tree has a great harvest, you profit a lot. If the harvest is weak, you get less.
By the end of the season, the apples stop growing and the YT is worth nothing at expiry.
In short:
PTs = Owning the tree → safe, fixed return.
YTs = Owning the apples → variable, higher-risk reward.
With this new integration, we have updated our FAQ to anticipate further questions.
What is PT-stcUSD?
PT-stcUSD is a digital token that represents the principal of stcUSD. Holding PT-stcUSD gives you a fixed yield rate. At expiry, PT-stcUSD can be redeemed for 1 stcUSD.
What is YT-stcUSD?
YT-stcUSD is a digital token that represents the underlying yield for stcUSD. Holding YT-stcUSD allows for the accrual of stcUSD and caps. At expiry, YT-stcUSD is worth 0.
What is PT-cUSD?
PT-cUSD is a digital token that represents the principal of cUSD. Holding PT-cUSD gives you a fixed yield rate. At expiry, PT-cUSD can be redeemed for 1 stcUSD.
What is YT-cUSD?
YT-cUSD is a digital token that represents the underlying yield for cUSD. Holding YT-cUSD allows for the accrual of caps. At expiry, YT-cUSD is worth 0.
Why would someone want to hold PT-stcUSD or PT-cUSD? What are the risks?
Someone would want to hold PT-stcUSD or PT-cUSD because it is a predictable and guaranteed return.
Because it is a fixed rate, the risk of PT-stcUSD or PT-cUSD are minimal.
Why would someone want to hold YT-stcUSD or YT-cUSD? What are the risks?
Someone would want to hold YT-stcUSD because they believe the implied APY of stcUSD will increase in the future. Implied APY is how Pendle calculates the “price” of a PT or YT asset.
Someone would want to hold YT-cUSD because it is essentially a leveraged position on the caps program.
The risk associated with YT-stcUSD is that the implied APY decreases or that total yield that is accrued over time does not cover the initial cost.
The risk associated with YT-cUSD is that the caps accrued are potentially worth less than the initial costs.
Pendle
Cap
I’m still confused about PTs and YTs. What is an easier way to understand it?
Think of PTs and YTs in terms of yin and yang. PTs are the yin and represent duration and predictability while YTs are the yang that represent yield and volatility. More about this model can be read here.
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