3 Protocols To Leverage Pendle’s PT Tokens

Pendle has emerged as a notable success story in DeFi, known for its innovative approach to yield tokenization and yield trading. Pendle's Principal Tokens (PTs) represent ownership of underlying assets, enabling users to separate and trade future yield. PTs already offer appealing implied yields—and leveraging PTs enables investors to maximize returns and further multiply those yields.

Three different DeFi protocols currently let you maximize your yield on Pendle’s PTs, specifically on Arbitrum. Let’s get to know Marginly, Dolomite, and Silo Finance.

1. Marginly

Marginly is the golden child of lending and leveraged trading. Lenders deposit into single-sided liquidity pools, while traders post collateral, select their leverage, and execute trades. When traders borrow funds from these single-sided pools, those funds are used to instantly purchase more of their selected asset, thus adding leverage.

Marginly enables users to take a 10X leveraged position on PTs, paired against its underlying asset. This is accomplished in just one click, complemented by an easy-to-use interface:

1. Launch the Marginly dApp and select the “Farm” tab.
2. Click the PT that you want to increase your yield on, enter the amount, and click the “Farm” button.
3. When you want to close your position, select the position on the “Home” page and click “Stop Farming.”

Marginly's streamlined process makes it incredibly simple to leverage PTs, offering a seamless and efficient user experience. The entire process is done in one transaction and provides maximized returns.

2. Dolomite

Dolomite is a lending and borrowing platform that allows users to borrow against their PTs. Here's how you can obtain leverage on your PTs through Dolomite:

1. After obtaining your desired PT from Pendle, launch Dolomite’s app.
2. Visit the “Balances” tab and scroll down until you find the corresponding market for your PT. You can also sort by “In Wallet” to find it more quickly.
3. Click the plus sign and proceed with your deposit.
4. Next, visit the “Borrow” tab and select the “Open New Borrow Position” button. From the dropdown menu, pick the PT that you deposited, click “Max,” and then press “Add.”
5. Your PT gets posted as collateral. From within the position’s card, click “Borrow,” select the token you want to borrow, enter the amount, and finalize the transaction by clicking “Borrow.”
6. Go back to the “Balances” tab, and you should see your borrowed asset. Click “Swap” and trade your borrowed asset for the PT that you just posted as collateral.
7. Return to the “Borrow” page, select “Open New Borrow Position,” select your PT, click “Max,” and press “Add.”
8. Repeat this process until you do not have sufficient funds left to borrow against.
9. When you want to close your position, you’ll need to repay each loan individually.

This looping method used to leverage your PTs is a classic strategy to achieve spot leverage, though it can be time consuming and incur higher gas costs compared to your other alternatives. Dolomite is a notable project with top backers, including Coinbase Ventures. 

3. Silo Finance

Silo Finance is a platform that supports isolated lending and borrowing markets. By placing each asset in its own silo, users can borrow and leverage assets without affecting or being affected by other assets on the Silo platform. Similar to with Dolomite, users conduct a looping strategy using their PTs to obtain leverage on crypto assets. 

How it works:

1. Obtain your desired PT from Pendle and then launch the Silo dApp.
2. Select your PT on the “Markets” page and proceed with the deposit.
3. On the same page, now select the “Borrow” tab and use the sliding scale to select the amount that you want to borrow. Confirm the transaction.
4. Now go back to Pendle and use the borrowed asset to purchase more of the same PT.
5. Bring this PT back to Silo and continue to repeat steps 2 through 4 until you have obtained your desired leverage.
6. When you want to close your position, you’ll repay your loans on Silo.

Although looping transactions can be time consuming, Silo Finance is a popular and notable platform that has been vetted by its many partners. Users can rest assured knowing that their funds are SAFU, while enjoying an intuitive interface with sufficient data and information.

Which protocol should you use for PT leverage?

Among the options for leveraging Pendle’s PTs, Marginly stands out as the optimal choice due to its user-friendly interface, single-click leverage capabilities, and seamless transaction process. Marginly simplifies the entire leverage experience, allowing users to maximize their returns efficiently without the need for complex and time-consuming steps. This streamlined approach also reduces transaction costs, making Marginly the superior platform to get more yield on Pendle PTs.