Yield Trading: Principle Tokens (PTs)
Underlying assets: USDe, sUSDe (to start). Optionally adding other high-quality protocols with strong liquidity.
Pendle splits yield-bearing assets into two components: Principal Tokens (PTs) and Yield Tokens (YTs). PTs represent the right to redeem the underlying asset 1:1 at maturity. By buying PTs at a discount, investors effectively lock in a fixed yield. The APY of a PT reflects the market’s expectations for future yields and gradually converges towards a price of 1, meaning that one PT can be redeemed for exactly one of the underlying tokens at maturity.
For Noon, PT buying is attractive because it combines high fixed yield with deep liquidity. Our strategy focuses only on PTs backed by highly liquid, trustworthy protocols and sufficient secondary market depth.
Read our full PT Primer for a detailed walkthrough of how Pendle works, the mechanics of PT pricing, risks, and more.
Noon Risk Assessment Summary
Our analysts’ recommendation
We’ve completed our initial analysis and now invite community input on whether Noon should add PT buying to its permitted deployment strategies.
Recommendation: Proceed conditionally — with strict liquidity and underlying protocol requirements. Why?
Stability-first fit: PTs allow Noon to lock in predictable yields that outperform T-bills, aligning with our mandate for low principal volatility.
Risk controls: We will enforce:
Maturity selection: Favour longer-dated PTs to reduce rollover costs and improve predictability.
Position caps: Limit per-pool exposure to avoid slippage and liquidity concentration risk.
Hurdle rate: Only deploy into PTs where implied yield meaningfully exceeds the T-bill rate.
Monitoring: Automated alerts for PT price deviations, liquidity changes, and protocol-level risks.
Together, these conditions support attractive, fixed yield with controlled downside.
Internal PT Exposure
Noon also operates its own Pendle and Spectra pools for USN and sUSN, where external participants can trade yield. However, Noon itself will never buy PTs from its own pools. Doing so would effectively amount to “self-dealing”: minting USN with collateral, using that USN to purchase PT-USN, and eventually redeeming back into USN. This circular loop eliminates the original collateral and leaves Noon with unbacked USN, relying entirely on secondary markets to restore the collateral. To preserve the integrity of our collateralisation, Noon’s PT strategy will only involve external protocols and assets — never own pools. Learn more about Buying PT through our Primer:
Review the community discussion in the Noon Governance forum here, and see the results of our Governance vote to permit deployment into Principal Tokens (PTs) here.
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