How to Read Pendle On-Chain Data and What the Yield Curve Means
Pendle's core mechanism splits yield-bearing assets into Principal Tokens (PT) and Yield Tokens (YT)—PT represents the principal redeemable at maturity, while YT represents all future yield until maturity. The yield curve essentially reflects the market's pricing consensus on future yield, which is the "Implied APY".
1. First Understand Pendle's Three Core Yield Metrics
Goal: Understand the three APY figures on the Pendle page—this is the prerequisite for reading the yield curve.
Details:
Underlying APY
The average yield rate of the underlying asset over the past 7 days.
For example, the actual savings rate currently generated by sDAI is 5%—this is the Underlying APY.
Implied APY
The market's pricing of YT, expressed as an annualized percentage yield.
Numerically identical to the "Fixed APY"—if you buy PT now and hold to maturity, this is the guaranteed yield you will receive.
Implied APY is determined by supply and demand for YT and PT: the more people buy YT, the higher the Implied APY; the more people sell PT, the higher the Implied APY.
Long Yield APY
Estimated return: if you buy YT now and hold to maturity, assuming the Underlying APY remains unchanged, the annualized yield you can expect to earn.
Formula: Underlying APY - Implied APY. If the value is positive, it means YT is relatively cheap; if negative, YT is relatively expensive.
Relationship among the three: Implied APY is the market's pricing, Underlying APY is the actual yield, and Long Yield APY is the difference between the two. When Implied APY is lower than Underlying APY, buying YT has a positive expected return; when Implied APY is higher than Underlying APY, YT is expensive.
2. View Data from the Pendle Official Dashboard
Goal: Log in to the Pendle App and check the real-time yield data in the market list.
Steps:
Open app.pendle.finance and go to the "Markets" page.
Each market displays three core figures:
Implied APY: the current price of YT
Underlying APY: the recent average yield rate of the underlying asset
Long Yield APY: the estimated return for buying YT and holding to maturity
Take the sDAI market as an example: Underlying APY = 5%, Implied APY = 3.89%, Long Yield APY = 29.42% (positive, indicating YT is undervalued).
Check your understanding: find any market and interpret these three figures, understanding what their differences mean.
Prerequisite: Pendle supports 7 EVM chains (Ethereum, Arbitrum, Optimism, BNB Chain, Mantle, Base, etc.). Make sure you are viewing data on the correct chain.
3. Pull Quantitative Data Using the Pendle API
Goal: If you need to bulk-download data or perform automated analysis, call the Pendle official API.
Steps:
Call GET /v2/markets/all to retrieve real-time data for all markets—including fields like impliedApy, pt.price.usd, expiry.
Call GET /v3/{chainId}/markets/{address}/historical-data to get historical time-series data for a specific market. Set includeApyBreakdown=true to break down the composition of YT and LP returns (Protocol Yield, Rewards, Fixed Yield, etc.).
Example: fetch all data for a market on Arbitrum.
Check your understanding: successfully pull API data for a target market and parse the impliedApy and underlyingApy fields.
4. Interpreting the Yield Curve: What Implied APY Tells You
Goal: Turn on-chain data into trading decisions.
Decision Logic:
Judging whether YT is undervalued or overvalued
When Implied APY is significantly lower than Underlying APY, YT is undervalued, and the expected return of buying YT and holding to maturity is positive (Long Yield APY is positive).
When Implied APY is significantly higher than Underlying APY, YT is overvalued, and buying PT to lock in fixed yield is more advantageous.
Understanding changes in market sentiment
Implied APY rising: more people are buying YT or selling PT, indicating the market expects future yields to rise.
Implied APY falling: more people are selling YT or buying PT, indicating the market expects yields to decline or is turning conservative.
Pay attention to time decay
Even if Implied APY remains unchanged, as the maturity date approaches, the price of YT will naturally decline (the remaining yield to collect becomes smaller and smaller), and the price of PT will converge toward the underlying asset price. So holding YT is not "the longer, the more you earn"—its value goes to zero at maturity.
Check your understanding: develop your own judgment framework—when a market's Implied APY is below Underlying APY with a gap large enough, be able to identify potential arbitrage or speculation opportunities.
How to confirm mastery: pick any market on the Pendle Markets page, record its Underlying APY, Implied APY, and Long Yield APY. If you can determine whether buying YT is cheap or expensive and how much fixed yield you can lock in by buying PT, you have grasped the core logic. Afterwards, you can use the Pendle dashboard to track your position P&L, or build a data monitoring panel via the API.
