From Purchase Discount to Redemption
The unit matters. Pendle’s PT documentation uses PT-ezETH ($ETH): under normal redemption conditions, one PT represents one $ETH’s worth of ezETH at maturity, **not one ezETH**. $ETH is the accounting asset; ezETH is the token backing the claim.
Consider a hypothetical purchase of **100 PT for 95 $ETH-equivalent**, with 365 days remaining. All prices, exchange rates and costs below are illustrative, not market quotes. Assume normal redemption and intact backing.
The gross maturity value is 100 $ETH-equivalent, giving a 5 $ETH gain on the 95 $ETH purchase price: **5.26% over the year**. Using Pendle’s annualization method, for a PT redeemable for one accounting unit:
**Implied annualized yield = (1 ÷ PT price)^(365 ÷ days remaining) − 1.**
The price must be expressed in accounting units per PT. A 5% discount to redemption value is therefore not the same as a 5% return on purchase cost. The same discount over a shorter period implies a higher annualized yield, not a larger total payout.
Add an assumed 0.2 $ETH entry cost: total outlay becomes **95.2 $ETH-equivalent**. At maturity, if one ezETH is worth 1.10 $ETH, the 100 PT claim corresponds to approximately **90.91 ezETH**, worth 100 $ETH before costs. Deduct an illustrative 0.1 $ETH redemption network cost and net value is **99.9 $ETH-equivalent**, a **4.7 $ETH-equivalent gain**. Any conversion into another asset is separate from the underlying redemption.
An Early Sale Changes the Accounting
Now suppose the holder sells halfway through, with **182.5 days remaining**. The following ledger keeps that remaining term identical across the two early-sale scenarios and compares net value with the same 95.2 $ETH-equivalent initial outlay. Assume 0.5 $ETH of early-exit trading and network fees, with no additional price impact.
If the market’s required yield rises, a price of **0.94 $ETH per PT** implies approximately **13.17% annualized** over the remaining half-year. Selling 100 PT produces 94 $ETH before exit costs, or **93.5 $ETH net—a 1.7 $ETH loss** against total outlay.
If the required yield falls, a price of **0.99 $ETH per PT** implies approximately **2.03% annualized**. The sale produces 99 $ETH before exit costs, or **98.5 $ETH net—a 3.3 $ETH gain**. Those annualized yields describe the remaining maturity return at the new prices, not the original holder’s realized return.
At the same remaining term, a higher required yield means a lower PT price, and vice versa. But time also matters: a shorter wait for redemption supports a higher price at an unchanged yield. Rising yields therefore do not automatically mean a loss relative to the original purchase.
An actual early exit also depends on liquidity. A thin pool or a large sale can worsen execution through price impact or slippage. Pendle charges swap fees; their calculation scales with time to maturity. Its documentation says redemption after maturity has no protocol fee, although network gas still applies. Neither a displayed annualized yield nor a reference price alone establishes net sale proceeds.
Fixed Units Are Not a Dollar Guarantee
An $ETH-denominated gain can still be a dollar loss if $ETH falls. The underlying token also carries its own risks: Pendle warns that a decline in an interest-bearing token’s exchange rate below its recorded high-water mark can reduce PT’s maturity redemption below the normal accounting-unit amount.
Contract risk sits alongside asset risk. Sky discloses Pendle protocol risk separate from sUSDS, and Pendle warns of risks in third-party contracts. Holding to maturity removes the need to sell at an interim market price; it does not remove those risks. After maturity, PT remains redeemable but earns no further yield for its holder.