Author: @agintender

Original link: https://x.com/agintender/status/1956199137394737324

Statement: This article is a reprint. Readers can obtain more information through the original link. If the author has any objections to the reprint format, please contact us, and we will make changes according to the author's request. Reprinting is for information sharing only and does not constitute any investment advice, nor does it represent Wu's views and positions.

We live in a world composed of expectations and reality. What is the value of the assets in your hand, whether it is a string of code or a piece of concrete land? Is it the ownership at present, or its infinite possibilities in the future?

Most investments bundle 'assets' and 'time' together and sell them to you. Pendle, however, is like a precise surgeon, using a 'surgical knife of time' to dissect it, allowing us to glimpse the essence of value. The trading of interest rates = trading of the time value of that asset.

This framework of thought generates a remarkable resonance when examining another seemingly unrelated field—the precious parking space market in Hong Kong. You will find that many traditional financial operations are essentially shadows of Pendle, just previously lacking a clear, programmable language to describe them. (This description is exaggerated, don't take it too seriously.)

They collectively reveal a profound secret: the essence of any asset can be broken down into two dimensions: 'principal' and 'yield.' This is not just financial operation; it is a social experiment about time, ownership, and human desire.

1. Pendle's Time-Space Surgical Knife: The Birth of PT and YT

First, let us understand what Pendle is doing. It has conducted a time-space dissection on any interest-bearing asset (e.g., stETH). One asset goes in, and two things come out:

1. Principal Token (PT): This represents the 'certainty' of the asset. It is a certificate that can be redeemed for the 'underlying principal' at maturity. You buy a certain future at today's discounted price. PT strips away all floating yields, leaving only a promise: in the future, the asset returns to its owner.

2. Yield Token (YT): This represents the 'potential' of the asset. It is a ticket that grants you the right to capture all future yields generated by the asset before the maturity date. These yields are uncertain and floating. After maturity, YT becomes worthless. You are not buying the asset itself but the 'output rights' of the asset over a period, a bet on an uncertain future.

The core of this surgery is to slice the ownership of the asset in the time dimension. Intuitively, their price relationship is approximately: PT price + YT price = current price of the underlying asset. The market uses real money transactions to split, price, and redistribute 'future time slices.'

2. Hong Kong Parking Space: An Invisible PT/YT Game

Now, let us shift our perspective to Hong Kong. A parking space worth 3 million HKD has long surpassed its usage attributes and become a pure financial game. When an investor buys it, he has actually unconsciously completed a dissection similar to Pendle's in his mind:

· Parking Space Ownership = PT: The visible and tangible piece of concrete itself represents the 'ultimately realizable principal.' It is the scarcity in this crowded city, a safeguard against the erosion of time. This is the future ownership of the parking space.

· Rental Income Rights = YT: The 'monthly rental cash flow' within a specific period (e.g., the next 36 months), and more importantly, the 'speculative premium' on the future price surge. This is the present ownership of the parking space.

When a Hong Kong person says 'buying a parking space is better than buying stocks,' what he is actually trading is mainly the 'YT attribute' of that parking space. In this way, the traditional blurred mix of 'buying a parking space = buying an asset + collecting rent' is split into two clear tickets.

3. Three Ways to Play, Two Reflections of Life

Pendle standardizes the ways to play, and these ways have already been played out in the real-world parking space transactions.

1. Lock in Fixed Income (Buy PT / Sell YT)

· Pendle Play: Deposit assets, immediately sell YT, keep PT. This is equivalent to 'pre-discounting future yields' in exchange for today's certainty of returns.

· Parking Space Play: Developers or large owners package the rental income rights (YT) for the next 3 years and sell them to operators, getting cash back at once, locking in a certain internal rate of return (IRR) in advance.

· Suitable For: Conservative investors or institutions averse to volatility who only want to earn 'time value.'

2. Bet on Future Prosperity (Buy YT)

· Pendle Play: Directly buy YT in the market, betting that future yields will rise, thus obtaining excess returns.

· Parking Space Play: Professional operators take over rental income rights, betting on occupancy rates, rental negotiation ability, and the operational increases (Alpha) brought by 'transformation/joint operations/digital efficiency.'

· Suitable For: Aggressive players with professional operational capabilities who can bear risks and seek excess returns.

3. Become a Market Maker of Time (Provide PT/YT Liquidity)

· Pendle Play: Provide liquidity for PT/YT trading pairs, earn transaction fees and incentives, and manage the unpredictable losses brought by time decay.

· Parking Space Play: Developers or management companies become 'matchmakers,' creating price differences between buyers and sellers with different durations and risk preferences through pre-selling rents, repurchase clauses, and packaged sales, earning liquidity premiums.

· Suitable For: Professional financial institutions capable of managing complex risks, skilled in pricing and hedging.

4. Homomorphic Risks: From Smart Contracts to Legal Documents

Pendle codes risks, and these risks correspond astonishingly to the real world:

· Interest Rate Risk — Macroeconomic Financing Environment: Fed interest rate hikes, rising basic interest rates in DeFi, PT discounts deepen; in reality, rising mortgage rates similarly pressure asset valuations.

· Underlying Risk — Legal and Ownership Risks: Vulnerabilities in smart contracts may cause your assets to vanish; in reality, a defective property title or management regulation can likewise turn your rental income (YT) into worthless paper.

· Liquidity Risk — Transaction Friction Costs: On-chain assets can be traded 24/7, but when liquidity dries up, there can also be significant slippage; offline assets face high friction costs such as stamp duty, legal fees, and transfer times. One of the values of PT/YT is to greatly reduce this friction.

5. A Moment of Enlightenment: Three Statements of Impact

When we use the language of PT/YT to re-examine the world, a sense of shock arises:

1. Price is the Shadow of Time: You think you are buying an asset, but you are actually buying 'future time slices.' PT/YT simply materializes this shadow.

2. Yield is not an inherent 'accessory,' but an independent asset: When you detach the yield rights from the asset, the market will brutally tell you how much it is worth.

3. Liquidity is the new moat: Whoever can transform complex, non-standard rights into clear, standardized, and tradable rights can realize the 'invisible time dividend.'

6. The Ultimate Question: Is it Market Dream Rate? Or Earnings Rate?

This comparison between the virtual and real ultimately leads to several fundamental questions:

· The Essence of Existence: Is the 'existence' of an asset its physical entity (PT), or the utility and cash flow it can generate (YT)? When the speculative value of YT far exceeds that of PT, are we pursuing the asset itself, or an illusion called 'yield'?

· The Cost of Certainty: How much of the current possibility are we willing to give up for future certainty (holding PT)? Conversely, how much risk are we willing to bear to chase infinite possibilities (speculating on YT)?

· The Forms of Desire: Both Pendle and Hong Kong parking spaces reflect the most primitive human desires: the craving for stability (PT) and the greed for sudden wealth (YT). The entire complexity of financial markets may stem from the eternal struggle and balance between these two forces.

From DeFi code to Hong Kong's reinforced concrete, we see the same story. Humanity has never stopped inventing new tools and contracts to cut, trade, and gamble on our only non-renewable asset—the future.

Next time you see a jaw-dropping asset price, perhaps ask yourself: how much of it is principal, and how much is dream?

When assets are sliced by time, what is traded is no longer a vague good or bad, but clear choices and responsibilities. This is what makes time tell the truth. Just how much are you willing to pay for time?

Know what is, and also know why it is.

Disclaimer: Conflicts of interest, NFA.