Pendle is a fixed yield protocol built on EVM and live on ethereum, arbitrum. Below summary is of pendle v2 which was released around November 2022.
Pendle produces fixed yield by splitting a yield-bearing assets into principle token and yield token. Principle token (PT) represents the underlying asset locked up for a period of time and yield token (YT) represents the yield component of an underlying yield-bearing asset.
SY = PT + YT
SY is a token standard that implements a standardized API for wrapped yield-bearing tokens within smart contracts - https://eips.ethereum.org/EIPS/eip-5115. All yield-bearing tokens can be wrapped into SY, giving them a common interface that can be built upon.
NOTE:** SY is a purely technical component, the user does not interact directly with SY.
Principal Token (PT) represents the principal portion of an underlying yield-bearing asset. Upon maturity, PT can be redeemed at 1:1 for the underlying asset (e.g. 1 PT-stETH is redeemed for 1 ETH worth of stETH).
Yield Token (YT) represents the yield component of an underlying yield-bearing asset. By holding YT, users are entitled to receive the yield of the underlying asset, the rate of which is represented as "Underlying APY" in the Pendle app. For example, holding 10 YT-stETH lets you receive all of the yield from 10 ETH deposited in Lido.
PT and YT have an expiry time after which PT can be converted to the underlying asset and YT stops producing yield and is worth 0.
