Pendle BTC (12/24 expiry) Market Making
This pool facilitates yield trading on SolvBTC.BBN and has a maturity date of 12/25/2024, after which no more yield is accrued. In practice, this means you are facilitating swaps between a Principal Token (PT) with a fixed maturity date, and a wrapped version of the underlying asset (SY token). Your yield is generated from swap fees paid by traders when an exchange happens, fixed yield from the PT exposure, underlying yield from SY, and PENDLE incentives.
This opportunity works well for investors who want long exposure to Bitcoin (BTC). Keep in mind, your returns are impacted by the price of BTC and this pool's yield. Pool returns are better when held until expiry. To capture all the yield potential in this pool, consider holding it until the expiry date.
Risks include multiple smart contract risks and the potential depeg of SolvBTC.BBN. Pool is subject to loss if SolvBTC.BBN depegs significantly. Since PT tokens act as zero-coupon bonds, they will appreciate over time such that you can redeem the full underlying yield-bearing token (SolvBTC.BBN) at the maturity date. If liquidity is provided until maturity, an LP’s position will be equivalent to fully holding the underlying asset since PT essentially appreciates towards the underlying asset.
Your yield primarily comes from the swap fees paid by yield traders when swapping between SolvBTC.BBN and a fixed-yield derivative of SolvBTC.BBN, plus protocol incentives. The more trades, the higher the fees that you earn. The yield can change depending on transaction volume and value.
