Compared with Pendle

Currently, Pendle is the most popular yield tokenization protocol on the market. Here’s a comparison of OutStake and Pendle, highlighting the advantages of OutStake and the problems it addresses:

1. Token Types and Composability

   • Pendle: The minted PT (Principal Token) and YT (Yield Token) have expiration dates. PT and YT are not standard ERC20 tokens but are closer to NFTs (Non-Fungible Tokens). Throughout the operation of the protocol, Pendle deploys numerous PT and YT contracts for the same Yield-bearing Token with different staking expiration dates, leading to fragmented liquidity and limiting the composability and use cases of assets on Pendle. In particular, YT's value goes to zero upon expiration, further restricting its usability.

   • OutStake: The minted PT and YT are standard ERC20 tokens with no expiration date, allowing them to be freely integrated into other DeFi protocols. During the protocol’s operation, each yield-bearing token corresponds to only one YT and one PT contract, a design that enhances composability and flexibility. Importantly, OutStake introduces a universal asset principal token (UPT), enabling the minting of identical UPT when staking yield-bearing tokens backed by the same underlying asset, thereby sharing liquidity across different yield-bearing tokens. Furthermore, OutStake’s YT serves as a unique stablecoin pegged to yield rates, allowing users to take long or short positions on yield rates and lock in future yields.

2. Fixed Rate Yields

   • Pendle: The quantity of PT minted is equal to the amount of staked tokens, and PT experiences a time-decreasing negative premium. The fixed-rate yield comes from the negative premium of PT, which represents the losses incurred by stakers and users who purchase YT. To obtain a fixed yield rate, users must purchase the corresponding PT. Due to the negative premium of PT, early sellers of PT incur losses, significantly reducing the practical value of PT and making it difficult to integrate into other DeFi applications.

   • OutStake: The amount of UPT minted is related to the number of YT minted by users and the redeemable value of YT, which prevents UPT from generating a negative premium. OutStake introduces tradable SP, representing the principal redemption rights of locked yield-bearing tokens upon maturity. By purchasing SP, users can obtain fixed-rate yields based on the underlying asset, with these yields derived from user demand and exchange, rather than losses incurred by stakers

3. YT Value

   • Pendle: The value of Pendle's YT is heavily influenced by protocol incentive points, causing a significant deviation between its price and the actual yield of the yield-bearing tokens. The protocol can arbitrarily manipulate YT through incentive points, posing a serious risk of centralization. Investors who purchase YT solely for yield will suffer significant losses, and the trade fees are very high, leading to low trading volumes of YT in the market and almost no composability.

   • OutStake: The value of Outrun’s YT is directly tied to the yield of the yield-bearing token and is not influenced by protocol incentive points, mitigating the risk of price manipulation. As a result, OutStake’s YT is more decentralized, exhibiting stronger financial characteristics and composability, allowing investors to trade interest rates solely by trading YT. In the future, incentive points will be directed to PYT (Points Yield Token), enabling users to independently trade incentive points through PYT, further enhancing market transparency and efficiency.

4. Staking Duration

   • Pendle: The staking duration is determined by the protocol, and users cannot freely choose the staking period.

   • OutStake: Users can freely select the staking duration, controlling the amount of PT minted. The staking duration is abstracted as SP, making the position expiration time a tradable asset, further increasing flexibility.

5. Yield Sources

   • Pendle: Pendle does not generate real external yield, its fixed-rate yield essentially comes from the losses of stakers and users who purchase YT. The high fixed-rate yields of Pendle in the past were primarily due to various airdrop points from Restaking and other protocols, which led users to willingly incur losses in exchange for airdrop rewards, creating a temporary high fixed yield.

   • OutStake: Through the Outrun ecosystem, support for multiple assets has created a robust arbitrage market and diverse income streams. In addition to earning interest yields, users can also obtain fixed-rate yields by trading SP. Moreover, due to the high composability of tokens such as PT (UPT) and YT, the ecosystem exhibits a powerful network effect, further enhancing the protocol’s overall profitability and scalability.