Pendle
Overview of Renzo Integration on Pendle:
For questions on terminology, please reference the Pendle Glossary.
Renzo’s integration with Pendle involves utilizing a single contract, EIP5115 SY token, which represents $ezETH at a 1:1 ratio.
This SY token can be tokenized into Principal Tokens (PT) and Yield Tokens (YT):
1 PT is redeemable for 1 ETH worth of $ezETH at maturity.
1 YT represents all yields and points from 1 ETH worth of $ezETH
Importantly, Renzo pool has a 3-month duration, which makes it a favorable pool for both PT and YT with quicker maturity and accrual of points.
Note: PT holders are eligible to redeem PT for the underlying asset at maturity, holders of PT are not eligible to receive points or rewards on their PT. Please reference Pendle’s documentation to learn about the differences between PT and YT tokens, and learn about SY tokens.
Positions eligible for points within this integration include holding:
SY tokens (EigenLayer Points & 4x ezPoints)
YT tokens (4x ezPoints + Leveraged points exposure + yield)
LP tokens (4x ezPoints Boost on LP + PENDLE rewards + yield)
Liquid Locker (receipt tokens)
SY and PT tokens can be paired together in Renzo’s AMM pool to generate LP tokens, which can then be deposited into liquid lockers (such as Penpie, Equilibria, and StakeDAO) to enhance yield through vePendle boosting.
Liquid lockers for Pendle enable users to enjoy boosted rewards by providing liquidity without needing to hold any vePENDLE, while continuing to earn both Renzo ezPoints and EigenLayer points.
(due to the SY proportion in the AMM pool), and having liquid locker positions.
The yield market on Pendle can be broken down into 3 positions for $ezETH:
PT - Principal Token - Fixed yield (low risk/reward)
YT - Yield Token - (high risk/reward)
LP - Single asset strategy (boosted rewards)
PT-$ezETH
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-$ezETH is redeemed for 1 ETH worth of ezETH).
This strategy consists of depositing your $ezETH into the Pendle protocol for a fixed duration, and earning a fixed yield at maturity.
Reminder: This strategy does not earn you EigenLayer and Renzo ezPoints. You are simply locking in a fixed yield in ETH.
YT-$ezETH
Yield Token (YT) represents the yield component of an underlying yield-bearing asset.
For every 1 YT-$ezETH you own, all of the yield and points generated from 1 $ezETH will stream to your wallet in the form of SY tokens, until maturity.
The price of YT is subject to market rates depending on how the market values it. Typically, you look at the long yield APY to determine the price you’re willing to pay. But with $ezETH, there are other factors to consider such as Renzo ezPoints and EigenLayer points.
SY-PT LP
By providing liquidity to the pool, you will be getting layered rewards.
4x Boosted Renzo ezPoints
EigenLayer Points
ETH staking rewards
Swap fees
Pendle rewards
PT $ezETH fixed yield
The $ezETH LP position consists of PT-$ezETH/SY. The SY portion earns yield. This is also single asset exposure, meaning impermanent loss (IL) is minimal (maximum of .9%), and zero IL if LP is held until maturity.
Overview of Zero Price Impact Mode:
On Pendle, LPs have the option to activate Zero Price Impact Mode, which allows LPs to provide liquidity to the PT-$ezETH/SY pool without affecting the price. Normally, when liquidity is added, a portion of the underlying asset is used to purchase PT from the PT-$ezETH/SY pool and the rest is wrapped into SY. However, this purchase of PT can cause a price impact.
Zero Price Impact Mode Enabled
The underlying asset is fully wrapped into SY, a portion of which is used to mint PT-$ezETH and YT-$ezETH. In this scenario, YT is not sold. Now, YT receives yield and points, hence zero price impact mode means you retain your full $ezETH yield and points, while also earning additional yields on Pendle. The PT-ezETH and remaining SY are then used for liquidity provision, with the YT returned to the user’s wallet. This eliminates the step of purchasing PT, thereby avoiding any potential price impact.
Here you earn 3x Renzo ezPoints on your deposit and 1x EigenLayer points (the same as if you simply held $ezETH).
Zero Price Impact Mode Disabled
With zero price impact mode disabled, when you zap into Pendle, a portion of your $ezETH (or SY) is converted into PT-$ezETH to LP. The YT tokens are sold for equivalent amounts of PT-$ezETH/SY to be LP-ed. This action reduces your total YT holdings, subsequently lowering your points earnings to approximately 1x Renzo ezPoints and 0.5x EigenLayer points.
Instructions for providing liquidity
To maximize rewards (EigenLayer and Renzo ezPoints) without participating in liquid lockers, enable zero price impact when zapping in.
This is how you can provide liquidity into the $ezETH pool:
Visit the link above; make sure you’re connected to the right network
Make sure Zero Price Impact Mode is switched on
Approve your input token
Add Liquidity
After doing the steps above, you will be holding:
The LP token consists of roughly half in PT-$ezETH and half in $ezETH (which is represented as SY). This position is guaranteed to gain in $ezETH terms if held until maturity (because the PT will appreciate in ezETH terms)
Some YT-$ezETH tokens, which earn the underlying asset’s yield and are claimable any time
Token Zapping:
If using a tokenIn other than $ezETH, the protocol will automatically zap your token to the required $ezETH. You may be subject to swapping price impact in this case.
Please note that supplying liquidity to SY/PT via liquid locker increases your ezPoints earnings back to 3x Renzo ezPoints. *EigenLayer Points only accrue to the holders $ezETH portion of their DEX LP*
For more on Zero Price Impact - see Pendle doc’s here
Liquid Lockers
When a user deposits their LP position into a liquid locker, they continue to earn EigenLayer points at 1x and Renzo ezPoints at 4x.
The Liquid lockers will soon be integrated into Renzo’s point tracking are listed below:
Equilibria
Penpie
Stakedao
Note: YT yields are distributed as SY, which can be unwrapped back into the underlying asset using SY Unwrapper.
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