Recently, I have been playing with #DEFI projects and found that many ecosystems have introduced Pendle's PT YT LP mechanism. I feel that Pendle's mechanism will become increasingly popular. I have spent some time researching PT YT LP, and today I will briefly discuss it.

1-PT (Principal Token): Typically purchased at a discounted price (below the value of the underlying asset) during the early stages, it can be exchanged for the underlying asset at a 1:1 ratio upon maturity. The discount reflects a fixed yield (Fixed APY), and PT is suitable for users seeking stable returns.

2-YT (Yield Token): YT represents the future yield portion of the yield asset. Holding YT allows you to receive all the earnings of the underlying asset before maturity. The value of YT decreases over time, reaching zero at maturity.

If the actual yield (Underlying APY) is higher than the expected yield (Implied APY) at the time of purchase, profits can be made; otherwise, losses occur. YT is speculative and suitable for users who are optimistic about rising yields.

3-LP (Liquidity Provider Token): LP tokens are obtained by providing assets (such as PT and SY) in Pendle's liquidity pool.

LP earnings include: fixed income from PT, underlying income from SY, transaction fees, and PENDLE incentives. By locking PENDLE, one can earn vePENDLE, further enhancing APY (up to 2.5 times). LP is suitable for users who wish to obtain both fixed and floating returns.