Pendle Margin Trading
Last updated
Last updated
The following guide describes how a user can use Pendle PT eUSDe and Pendle LP eUSDe tokens as collateral to borrow USDC with x2 leverage and put it into Pendle eUSDe markets for leveraged exposure.
Whole video tutorial can be found at Pendle Margin Trading
We assume that an Asset Manager already has access to the pool for this trade. They need to check what collateral is available for this pool and their corresponding Stress Tests to control their liquidation.
Secondly, they need to ensure that their wallet address, which was previously whitelisted to interact with the pool, has enough of LP-eUSDe-29May2025, PT-eUSDe-29May2025 tokens.
By clicking on Borrow, we start the process of opening a Margin Account and taking the loan from the pool.
An Asset Manager should choose collaterals and their amounts which they want to use to open the trade.
User can see the Risk Factor of the Margin Account at trade origination. By choosing different values of collateral relative to the borrow amount, the Asset Manager can see how sensitive their Risk Factor is relative to leverage. Clicking on Confirm Transaction, we start the process of taking the loan.
First, we need to sign Token Allowances from our wallet to provide an Arkis Protocol allowance for interacting with collateral tokens.
When allowances are accepted, Arkis Protocol will initiate a transaction request to send collateral tokens from the borrower's address to Margin Account.
When the transaction is signed, the Asset Manager receives notification that the leverage was taken successfully.
When the Asset Manager signs a transaction, Arkis Protocol initiates the following process of Opening a Margin Account:
Take Margin Account (smart contract) out of pre-minted Margin Accounts inside of Margin Account.
Allocate collateral tokens to the Margin Account.
Allocate leverage from the Liquidity Pool to the Margin Account.
As these operations are not instant, it takes up to 10-15 minutes for them to complete, the Asset Manager can ensure that the Margin Account address was reserved for them by clicking on the "On Hold" tab.
The user should refresh the page and see when their Margin Account appears in the Opened tab. Now the account is ready to be interacted with.
When Margin Account is opened, we can check it's two most important metrics:
Stress-tested Value
Risk Factor
Stress-Tested value is the sum of assets inside the Margin Account adjusted for Stress-Tests configured within a specific pool.
At origination, our account contains:
1 PT-eUSDe-29May 2025
0.5 LP-eUSDe-29May 2025
2 USDC (borrowed assets).
For Pendle LP/PT oracles Arkis uses Pendle Oracle to convert the value of Pendle PT/LP tokens into the underlying asset and then applies Stress-tested value from the pool to price underlying asset in borrowed assets terms.
As a result:
1 PT-eUSDe-29May 2025:
~1 eUSDe * 0.85 = 0.85 USDC
0.5 LP-eUSDe-29May 2025:
~1.04 eUSDE * 0.85 = 0.884 USDC
2 USDC = 2 USDC
Total Stress-Tested Portfolio Value = 0.85 + 0.884 + 2 = 3.768 USDC
Risk Factor is a Portfolio Stress-Tested Value divided by Borrowed Amount: 3.768 /2 = 1.84
Now, its time to convert borrowed USDC into Pendle tokens. By clicking on Margin Account card a user is forwarded to the dedicated Margin Account page. In order to connect Margin Account to Pendle or any other external dApp click on Trade with WalletConnect
Go back to Pendle and choose Wallet Connect as your connection option and copy the link.
Go back to Arkis Platform and insert the link into the input field.
If you go back to Pendle dApp you can see that the connected address is the address of Margin Account.
Now you can make trades on behalf of Margin Account.
Set the amount of USDC you want to swap (1.5 in our case) into Pendle PTs and click on Swap. By clicking "Swap," you will see a transaction pop up in your wallet that originated the loan to interact with the Margin Account.
You can now see that your Margin Account Stress-tested value and Risk Factor dropped after Pendle swap. Let's see why.
The portfolio inside of Margin Account is:
2.5181 PT-eUSDe-29May 2025:
~2.5181 eUSDe * 0.85 = 2.14 USDC
0.5 LP-eUSDe-29May 2025:
~1.04 eUSDE * 0.85 = 0.884 USDC
0.5 USDC = 0.5 USDC
Total Stress-Tested Portfolio Value = 2.14 + 0.884 + 0.5 = ~3.5 USDC
Risk Factor is a Portfolio Stress-Tested Value divided by Borrowed Amount: 3.5 /2 = 1.74
Why did my Risk Factor drop from 1.84 to 1.74?
By converting borrowed asset (USDC) into riskier asset (PT eUSDe) Arkis Margin engine repriced portfolio value accordingly to stress-tested values.
It can also work the other way around: When a trader exits Pendle PT/LP markets into USDC/borrowed assets, their Risk Factor will improve as the portfolio consists of more low-risk assets.
As we did with the Pendle PT swap, we can swap the remaining 0.5 USDC into more Pendle LPs.
You can use Pendle dashboard or input the Margin Account address into the Etherscan to make sure that all swaps were completed.
On the Margin Account page, an Asset Management can click on Close Credit Account to repay the loan.
However, our Margin Account does not have enough of USDC amount of Debt + Interest accrued.
So, a user must either get it by swapping assets inside the Margin Account (LPs, PTs) back to USDC or by sending the necessary amount of USDC to the Margin Account address.
When Margin Account has the necessary amount of USDC, user can initiate closing of Margin Account (debt repayment).
Once an Asset Manager signs the transaction to close the Margin Account, the protocol does the following:
Analyses the amount of borrowed assets (Total Debt + Accrued Interest) to be sent into the liquidity pool. Please note that the protocol will only take the total debt plus the interest amount. Any surplus will be returned to the wallet of the Asset Manager who originated the loan.
All other whitelisted assets (tokens, PT, LP positions) within the Margin Account will be transferred back to the Asset Manager's wallet.
Why is this important?
As you can see, when the Margin Account is closed, the protocol transfers only what the Margin Account owes to the Liquidity Pool; the rest is returned to the Asset Manager's wallet.
If an Asset Manager wants to liquidate the Margin Account portfolio themselves (using other protocols or some specific techniques) or doesn't want to exit positions at all to close the loan, they only need to send the borrowed amount + interest to the Margin Account address, and they will get everything else back to their own wallet once the Close Margin Account procedure is successful.
