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“Lend, borrow, buy more, repeat,” Pendle said in its launch thread. For a long position, the interface says users deposit collateral, select leverage and borrow stablecoins to buy more of the asset. The result is a larger position financed with debt, with liquidation risk if collateral loses value relative to that debt.
The stock routes listed at launch are longs financed by $USDC borrowing on Aave V4. Aave Labs says the seven equities are collateral-only: borrowing the stock tokens themselves is not enabled.
These are Coinbase Tokenized Stocks, whose tokens represent certificates issued by Coinbase Onchain SPV Ltd., according to Aave Labs. The underlying shares are held with Alpaca Securities. The products are available only to eligible non-U.S. persons in permitted jurisdictions.
PendleLoop Stock Longs on Base
Launch-interface snapshot: Oct. 21 ET (Oct. 22 UTC in the table). All seven routes borrow $USDC on Aave V4. Source: Pendle.
Yield Spreads Versus Price Bets
Pendle said it introduced PT looping three months earlier. That architecture now also covers assets without a maturity date, including sUSDe, wstETH and sUSDS. PT stands for principal token, the principal component separated from an asset’s yield in Pendle’s existing markets.
In Earn mode, users supply an asset or PT to a lending market, borrow against it, buy more of the asset and repeat. Unlike directional price trades, the collateral and debt assets are correlated; the strategy seeks to amplify yield while paying borrowing costs.
The Earn listings include sUSDe, sUSDS, wstETH and weETH on Ethereum, and syrupUSDC and PT AUSD on Monad. Lending venues shown include Aave, Morpho and Euler. Leverage depends on the pairing: the Ethereum sUSDS/USDT route on Morpho lists a maximum of 15.6 times and a 96.5% liquidation loan-to-value ratio.
That ratio marks the debt-to-collateral level at which a position becomes liquidatable. Pendle’s PT-looping guide warns that borrowing costs can outstrip fixed PT yield and erode equity. Depending on the oracle, PT price moves and underlying-asset depegs can also trigger liquidation. A fixed PT yield therefore does not make the leveraged return fixed.
The risk predates this expansion. The Defiant reported in August that a PT-price move triggered $36.1 million of liquidations on Morpho, without bad debt.
Stock collateral adds a different pricing constraint. Aave Labs says its Chainlink equity feeds update 24/5 and hold their last price over weekends and U.S. market holidays. LlamaRisk’s assessment warns that the reopening price can incorporate information accumulated during the closure in a single step, making a previously healthy position liquidatable when updates resume.
