Pendle opened its first Monad yield market on AUSD, the same institutional stablecoin NullTerminal already routes as a core intermediary token, and hit $51M TVL in its first 10 days.
Pendle tokenizes yield. It wraps a yield-bearing asset into a standardized form (SY), then splits that into two separately tradable tokens: a Principal Token (PT) and a Yield Token (YT). Depositing the underlying asset mints equal amounts of both, and from there they trade independently on Pendle's own AMM — an implied-APY-concentrated design adapted from Notional's model, not a plain constant-product curve, which steepens automatically as a pool approaches maturity. You don't have to hold both halves together.
PT is a discounted claim on the principal: it redeems 1:1 for the underlying asset at maturity, so its price sits below par and rises toward par as maturity approaches — buying PT below par and holding to maturity is effectively locking in a fixed yield. YT is the mirror image: it entitles the holder to the underlying asset's yield stream until maturity, and its price decays toward zero as that maturity date approaches, since there's less and less future yield left to claim. Buying YT is a leveraged bet that yield stays high (or a way for someone else to sell their future yield up front). PT and YT both track a shared yield index that's constructed to never decrease — if the underlying asset's real yield rate ever drops below its historical high-water mark, the index simply freezes rather than falling, and YT holders absorb that shortfall directly rather than it being spread across both sides. Redemption at maturity isn't automatic either — it requires a manual claim transaction, and yield left unclaimed after maturity is redirected to Pendle's own treasury rather than lost outright.
Pendle's original Monad pool is built on AUSD, Agora's institutional stablecoin backed by cash, repo agreements and short-term US Treasury bills managed by VanEck, custodied by State Street and attested monthly by Grant Thornton. The pitch is a fixed-yield trade: roughly 6.9% fixed via PT against AUSD's native floating base rate of about 3.5% — a real premium being paid by YT buyers to the PT side for the certainty of a locked-in rate, mechanically funded by Agora sharing a portion of its own reserve yield with integrators. A second, separate Monad pool trades PT/YT on earnAUSD, Upshift's actively-managed vault that allocates across lending, basis-trade and delta-neutral strategies rather than AUSD's passive T-bill yield — a materially different, higher implied APY than the plain AUSD pool, and a different risk profile since it inherits Upshift's own curator and allocation risk on top of Pendle's. The combined market reached roughly $51.25M in TVL and $22M in trading volume within its first 10 days, making Pendle Monad's fifth-largest protocol by TVL at the time.
Pendle sits in a different category from most other RWA-adjacent protocols on Monad — it's a secondary derivatives layer, not a primary source of yield or exposure. It doesn't generate new yield the way a lending market or an RWA vault does; it slices an already-existing yield stream (AUSD's or earnAUSD's) into a fixed leg and a leveraged, decaying floating leg. That means its own risk is entirely inherited plus its own contract risk: AUSD or earnAUSD's underlying reserve quality and Pendle's own AMM and index mechanics. Compared to buying AUSD or earnAUSD directly and simply holding it, using Pendle only makes sense if you specifically want to either lock in a fixed rate (via PT) or take a leveraged, time-decaying bet on yield staying elevated (via YT) — it's a tool built for rate traders layered on top of an RWA-exposure product, not a substitute for one.
The fixed yield only actually materializes if PT is held to maturity — selling early exposes you to market price, not the implied fixed rate. YT is a decaying asset by construction and can go to zero in value even if the trade was directionally right just too early, and Pendle's own documentation is explicit that if the underlying's yield rate falls below its historical watermark before maturity, PT itself can end up redeeming for less than its actual value — a real, acknowledged failure mode, not a hypothetical one. Pendle's own terms of use disclaim any guarantee that PT retains its value under all conditions. And because the whole structure sits on top of AUSD's or earnAUSD's own yield source, anything that disrupts either of those underlying yield flows would ripple into Pendle's Monad markets on top of Pendle's own smart contract risk — this isn't theoretical either: in April 2026, Pendle defensively paused its rsETH markets elsewhere in response to the KelpDAO/LayerZero bridge exploit, even though the bug wasn't in Pendle's own code.
Note: AUSD, the stablecoin underlying this market, is one of NullTerminal's own intermediary routing tokens — you can see it trading live at /markets.
It's locked in for the buyer at the price paid, via market-discovered pricing at purchase — not a contractual guarantee. Pendle's own terms of use disclaim that realized returns may differ, and a negative-yield event in AUSD (yield falling below its historical high) can still cause PT to redeem below full value.
YT streams the underlying's real-time realized yield. If the yield rate falls below its historical watermark, the shared index freezes rather than falling, and that shortfall is absorbed by YT holders specifically — YT payout can drop toward zero until the rate recovers, and YT's market price decays to exactly zero at maturity regardless.
Not under normal conditions — PT redeems 1:1 for the underlying at maturity. But Pendle's own documentation describes an explicit exception: if the underlying's yield rate falls below its historical watermark before maturity, PT can redeem for less than its full value.
Sources: Pendle Finance, Pendle is now live on Monad — Monad Blog, Pendle becomes fifth largest protocol on Monad with $50M TVL in 10 days — CryptoBriefing, Introduction — Pendle Docs, Pendle introduces sPENDLE, removing the need for long lockups — CoinDesk, Pendle contract deployments — GitHub
Last reviewed 2026-07-08. More Monad research.
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