Hey Edge readers,
Pendle’s fixed yield markets don’t just show what yields are available. They reveal how DeFi capital is positioning. By comparing yields and liquidity across assets and maturities, we get a clearer view of where traders see opportunity, where they are avoiding duration risk, and how different markets behave under the surface.
This week, we unpack what the structure of Pendle’s yield curves tells us about USD and ETH strategies and how to position accordingly.
Stay sharp. 🫡
- The Exponential team
What DeFi's yield curve reveal about yield opportunities today
How Pendle’s yield markets reflect trader preferences across stablecoins and ETH
USD: High Yields, Low Commitment
Stablecoin yields are hot in the short term, peaking around 12% APY in the 31–60 day range, but they drop off quickly after that. Liquidity tells the same story: the majority of liquidity sits in the 0-30 and 31–60 day buckets, while longer-term pools see much less activity.
Why?
There are plenty of high-yield opportunities for stablecoins right now. From incentive programs to airdrop rotations, new opportunities appear every week. That makes locking in yield for longer durations less appealing as the opportunity cost is simply too high. Committing to a 3-month position limits your ability to pivot if something better shows up.
In short, traders want flexibility to chase the next best yield, and the curve reflects that.
ETH: Fewer Options, Longer Locks
Now contrast that with ETH. Yields are lower overall, peaking around 5% in the 31 to 60 day range and remaining relatively flat through 120+ days. Liquidity is split between short and long maturities, with the 31 to 60 day and 120+ day buckets seeing the most activity.
Why are some ETH holders locking up for so long?
Because there just aren’t many great alternatives. ETH yields are mostly tied to staking returns, which are steady around 3%. If you find a 4–5% rate, it may make sense to lock it in as there’s little fear that something dramatically better will appear tomorrow. That’s why we see ETH holders more willing to commit to longer durations.
Key Takeaways
- USD yields are strong but fleeting. Traders don’t want to lock in yield when better short-term plays keep popping up. Expect lots of short-term rotation and competition.
- ETH yields are meh but stable. With fewer attractive alternatives, some ETH holders are locking into longer maturities to secure predictable returns, while others continue to farm short term.
