hBTC is live on Pendle. That gives BTC Basis+ a maturity date and two new ways to hold it. The principal on its own, and the yield on its own.
What yield tokenization is
Pendle is a yield-trading protocol. It takes a yield-bearing token and splits it into two tokens that exist until a maturity date. The principal token, PT, is the position without its yield. The yield token, YT, is the yield without the position.
Bond markets have done this for decades. A bond is a principal repaid at the end and a stream of coupons along the way, and dealers learned to sell the two separately. One buyer wants the certainty of the principal and pays less than face value for it. Another wants the coupons and nothing else. Pendle's own description of PT is a zero-coupon bond on the underlying asset. The difference is that the underlying here is not a bond. It is a token whose value moves with a fund's NAV.
The two tokens
PT. Because the yield has been stripped out, PT trades below the value it will have at maturity. As maturity approaches, its value climbs toward that level, and the climb is the fixed yield. At maturity, one PT redeems for one unit of the market's accounting asset, the asset the token is measured against, delivered in the yield-bearing token itself. PT earns none of the floating yield along the way. That goes entirely to YT.
YT. YT entitles its holder to all the yield the underlying token produces until maturity, claimable at any time. It costs a fraction of the token it draws yield from, which is why one YT gives the yield exposure of one whole token for a fraction of the capital. It also expires. Its value trends toward zero as maturity approaches and reaches zero on the day. Whatever yield it collected before then stays claimed.
Both tokens trade before maturity, and their prices are set by the market. The price of PT implies a rate, which Pendle calls the implied APY, the market's view of what the asset will yield until maturity. It is the same number as the fixed rate a PT buyer locks in.
How the market sets the rate
The rate comes from the balance of buyers on each side. When participants buy YT, the implied APY rises, and a new PT buyer locks in a higher fixed rate. When participants buy PT, the implied APY falls and YT becomes cheaper. The two sides pull on each other, and the rate on the market page is where they meet on the day you look.
The page shows two figures side by side. The implied APY, which is the market's rate. And the underlying APY, which is Pendle's seven-day moving average of what the token itself has been yielding. The gap between them is the trade. A PT buyer thinks the fixed rate is worth more than the floating one over the period. A YT buyer thinks the opposite.
Liquidity
A Pendle pool pairs PT with the wrapped underlying token, so a liquidity provider holds both. That position earns from four places. The underlying token's own yield. The fixed yield on the PT it holds. The swap fees from every trade in the market. And PENDLE incentives, which Pendle's model allocates to pools from the hour they are whitelisted. Because PT converges to the underlying at maturity, a position held to the end has no impermanent loss, and only a small one before then.
Maturity
Maturity is the date PT becomes redeemable and YT stops accruing. After it, PT holders redeem, YT holders claim what they collected, and liquidity providers withdraw. One asset can have several maturities at once, each its own market, and a matured position can be rolled into the next one.
Which one is for whom
PT is for participants who want a known rate to a known date and no interest in the month-to-month path of the strategy.
YT is for participants who have a view. They think hBTC will earn more over the period than the implied APY says, and they want that exposure without holding the token.
Liquidity is for participants who already hold hBTC and want fees and incentives on top of it, and who are comfortable that half of the position is PT.
None of this changes what hBTC is. The strategy, the fund and the administrator are the same on Pendle as in the vault. What Pendle adds is a date, and a choice about which part of the return you hold until then.
You can find the market HERE. And the pool HERE
For the vault itself, read How hBTC Works. For the mechanics from Pendle's side, read Pendle Academy.
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