Aave DAO opens Snapshot vote for proposal to add Pendle’s PT tokens to Aave V3 Core Market

Aave DAO members are voting on a proposal to add Pendle’s Principal Tokens to its V3 Core market.

The proposal, posted on the web3 voting platform Snapshot on Apr. 7, suggests listing an initial PT test asset. Pendle (PENDL) is a decentralized finance protocol that lets users split yield-bearing tokens into two parts; the Principal Tokens and Yield Tokens.

PTs represent the original value of the token and can be redeemed at full value once they mature, making them similar to fixed-income instruments. YTs, on the other hand, give holders access to the future yield generated by the underlying asset.

The proposal recommends starting with a listing of one PT test token. While it does not suggest immediate onboarding, the goal is to evaluate user demand and technical integration. To reduce extra risk, the idea is to start with PT tokens linked to assets that are already supported on Aave (AAVE), like sUSDe. 

Over the years, Pendle’s total value locked has risen to over $3 billion as interest in tokenized yield trading grows. The demand for using PTs as collateral has increased along with Pendle’s growth. By allowing users to borrow against PTs, Aave could capitalize on this momentum, giving yield traders new strategies and possibly unlocking billions in new loan volume.

Aave intends to use a proprietary pricing technique known as the “linearly increasing lower bound” model to account for the distinct structure of PTs. After assessing the integration, Aave’s risk service providers will set the risk parameters. The proposal lays the groundwork for future, broader support of PT tokens, even though the test PT token won’t be onboarded right away due to ongoing discussions about related assets. 

The proposal’s Snapshot vote opened on Apr. 7 and will end on April 11. So far, 100% of the 6,500 DAO members that have voted have given the proposal a thumbs up.

According to data from DeFiLlama, Aave’s V3 platform is still among the biggest in DeFi, with over $16.2 billion in total value locked and $9.9 billion in outstanding loans. The inflows for April have already reached $1.3 billion, surpassing $984 million recorded in March.