How to Execute a PT Buying Strategy on Pendle: A Practical Guide to Fixed Income
Think of PT (Principal Token) as a zero-coupon bond, and the strategy becomes clear: you buy at a discount, redeem the underlying asset 1:1 at maturity, and the difference is your fixed yield. The key factors are whether the discount is deep enough and your outlook on the underlying asset's future yield.
1. Determine If Now Is a Good Time to Buy PT
What to do: Assess whether the current PT price is cheap. On Pendle, the discount level is expressed as "Implied APY" — the higher the Implied APY, the cheaper the PT and the higher the fixed yield you can lock in.
How to do it:
Open Pendle's Markets page, find the asset pool you want to trade, and check two key metrics:
Implied APY: The fixed yield the market is currently pricing into the PT. This is the fixed APY you'll earn if you buy now and hold to maturity.
Underlying APY: The average yield of the underlying asset over the past 7 days.
Compare the two:
Scenario A: Implied APY > Underlying APY — The PT is undervalued. The market's future yield expectation is lower than the current actual yield. This is a buying opportunity.
Scenario B: Implied APY ≤ Underlying APY — The PT is overvalued or fairly priced. Usually not the best time to buy, unless you strongly believe the asset's future yield will decline.
Completion criteria: You have identified a pool where the Implied APY is significantly higher than the Underlying APY, and you have your own view on the future yield trajectory of that asset.
Preconditions: Wallet connected to Pendle, and your account holds the corresponding underlying asset (e.g., if you want to buy PT-stETH, you need stETH or tokens that can be swapped for it).
Common failure reasons: Looking only at the absolute Implied APY and ignoring maturity dates. Implied APYs for the same asset can vary significantly across different expiries. Shorter-dated pools often show higher APYs than longer-dated ones because the discount must unwind over a shorter period. When comparing, use pools with the same or similar maturity dates.
Risk warning: Implied APY is determined by market supply and demand and can be distorted by short-term FOMO or insufficient liquidity. If the Implied APY is abnormally high (e.g., more than double the Underlying APY), first check whether the pool has enough liquidity. In low-liquidity pools, slippage can eat into your returns.
2. Buy PT and Lock in Fixed Yield
What to do: Use the underlying asset or other tokens to buy PT on Pendle and establish your fixed-income position.
How to do it:
On the Pendle Markets page, select the target asset and maturity date, then click the "PT — Fixed APY" box.
Choose the input asset (the token you'll use to buy PT). This can be the underlying asset itself or any other token — Pendle will automatically route the swap.
Enter the amount, review the trade output and price impact.
Approve and confirm the transaction.
The input asset can be a token other than the underlying asset; Pendle will find the optimal swap route. Keep in mind that the swap path may incur extra slippage and fees.
Completion criteria: Your wallet's PT balance has updated, and your PT position appears on Pendle. At this point you have locked in the current fixed APY. Future changes in market rates will not affect the maturity yield of this position.
Preconditions: Step 1 is complete and you have confirmed a buying opportunity.
Common failure reasons: Forgetting to reserve gas fees. Pendle transactions require multiple wallet confirmations (approve + trade); insufficient ETH balance will interrupt the process.
Risk warning: PT guarantees a 1:1 redemption of the underlying asset only if held to maturity. If you sell early, your return depends on the PT's market price at that time, which could be lower than the fixed APY or even result in a loss.
3. Hold to Maturity and Redeem
What to do: Hold the PT until maturity, then manually redeem it for the underlying asset after the expiry date.
How to do it:
After the maturity date has passed, go to Pendle's Portfolio page, find the matured PT position, and click the "Redeem" button. The system will exchange your PT 1:1 for the corresponding underlying asset.
Completion criteria: Your PT balance in the wallet returns to zero, and the underlying asset balance increases by the corresponding amount. The yield has been realized.
Preconditions: The position has matured. Pendle does not auto-redeem; you must perform the redemption manually.
Common failure reasons: Forgetting to redeem after maturity. Although PTs can still be redeemed after the expiry date, funds sitting idle in the contract incur opportunity costs.
Risk warning: The redemption operation requires on-chain gas fees. If the value of the redeemed asset is small, gas fees may significantly erode your yield.
4. Exiting Early: When Selling PT Is More Profitable Than Holding to Maturity
What to do: Sell your PT before maturity to lock in profits early or cut losses. This is not a mandatory step, but if you judge that the PT price has already risen sufficiently, selling early could deliver a higher return.
How to do it:
When to sell: When the market's expectation of the underlying asset's future yield declines sharply, the Implied APY falls and the PT price rises. If the PT price has climbed close to or even above the underlying asset's price, selling early effectively captures most of the gain and also saves waiting time.
How to sell: On the Pendle Trade interface, select PT and sell it via market or limit order, exchanging it back into the underlying asset or a stablecoin.
Completion criteria: The PT position has been closed and the funds are back in your wallet.
Preconditions: The PT position has not yet matured.
Common failure reasons: Getting shaken out by short-term price swings and panic-selling during a PT price dip. PT prices will trend toward the underlying asset's value as maturity approaches; short-term fluctuations are normal. Do not sell just because the PT has been falling for a few days, unless your analysis tells you that "market expectations have already been fully priced in."
FAQ
Q1: After I buy PT, will the fixed APY I locked in change? No. The fixed APY you secured at the time of opening the position is guaranteed. Any changes in the displayed fixed APY only affect new users opening positions.
Q2: What maturity choices are available for PTs on Pendle? The same asset may have multiple maturity dates. Each maturity date corresponds to an independent market, and the Implied APY may differ. Common options include 3 months, 6 months, and 1 year. Your choice depends on your desired yield duration and your view on future interest rate movements.
Q3: While holding PT, do I still earn the underlying asset's native yield? No. While you hold PT, your capital exists in the form of discounted PT and generates no interim yield — the yield is realized in one lump sum as the price difference at maturity. This is precisely what "fixed income" means: certainty is prioritized over ongoing yield.
What to do next:
Open Pendle's Markets page, pick an asset you are familiar with (e.g., stETH or USDC pool). Don't place an order yet. Just do one thing: compare the Implied APYs of different maturities for that asset against its Underlying APY, and note their relationships. After this comparison exercise, you will have built an intuition for whether PT is cheap or expensive. Then, decide whether to go through a complete buy cycle as a test using a tiny amount of funds you are comfortable with.
