{"id":14357,"date":"2026-10-12T02:11:48","date_gmt":"2026-10-12T02:11:48","guid":{"rendered":"https:\/\/cryptonews.uk.com\/?p=14357"},"modified":"2026-10-12T02:11:48","modified_gmt":"2026-10-12T02:11:48","slug":"yield-trails-most-borrowing-rates","status":"publish","type":"post","link":"https:\/\/cryptonews.uk.com\/?p=14357","title":{"rendered":"yield trails most borrowing rates"},"content":{"rendered":"

<\/p>\n

\n

Aave\u2019s proposed USDG rollover would let borrowers carry their stablecoin debt into a new fixed-yield USDG position, but the replacement collateral currently yields less than three quoted borrowing rates. That leaves leverage and separately administered rewards central to whether extending the trade makes financial sense.<\/p>\n

The proposal concerns Pendle principal tokens, or PTs, on the X Layer network: holders of the token maturing Oct. 29 would move into a replacement maturing Feb. 25, 2027. In its Oct. 8 assessment, risk provider LlamaRisk said the February token\u2019s on-chain yield alone fell short of USDT0, USDC and USDG borrowing costs. GHO was the cheaper exception in that assessment\u2019s Oct. 7 snapshot.<\/p>\n

TokenLogic\u2019s proposal would enable a flash-loan transaction that temporarily repays debt, replaces the old PT collateral, borrows again and repays the flash loan. OKX would develop that integration separately. The Aave listing and separate OKX integration would both need to be implemented.<\/p>\n

\n

Related Reading<\/span><\/p>\n

Aave and Pendle may have found a way to keep yield capital from ever leaving DeFi<\/h3>\n<\/p>\n

<\/span> <\/div>\n

An Oct. 10 refresh preserves the gap. Pendle\u2019s market API reported a February PT implied annual percentage yield of about 2.98%, with data updated at 21:09 UTC. Aave\u2019s X Layer market display, retrieved at 21:11 UTC, showed variable borrowing APYs of 4.12% for USDT0, 5.87% for USDC and 3.75% for USDG.<\/p>\n

The readings show why transaction convenience and investment profitability are separate questions: a rollover can preserve access to borrowing while resetting the collateral\u2019s yield at the new purchase price.<\/p>\n

A Pendle PT is a discounted claim on an accounting asset at maturity. For this USDG market, LlamaRisk describes redemption as one PT for one USDG. The purchase discount determines the return from holding to maturity, while ordinary PT holders give up the underlying variable yield and points to the corresponding yield token, or YT, under Pendle\u2019s mechanics.<\/p>\n

Borrowing to buy more PT increases exposure to that discount. The strategy earns positive incremental carry when the acquired PT return exceeds its financing cost. When borrowing costs exceed the asset\u2019s return, each additional borrowed increment reduces the position\u2019s return before rewards and costs.<\/p>\n

That relationship looked different in LlamaRisk\u2019s August review. Using Aug. 18 data for the October maturity, it quoted a 3.19% PT yield against borrowing rates of 0.45% for GHO, 1.37% for USDT0 and 2.69% for USDG. The review described positive carry.<\/p>\n

The Oct. 7 snapshot for the February replacement quoted a 2.79% PT yield against 4.48% USDT0, 4.10% USDC and 3.67% USDG borrowing rates. GHO, at 0.93%, still borrowed below the PT yield. The comparisons span different maturities; existing October PT holders retain their original purchase yield.<\/p>\n

\n

Related Reading<\/span><\/p>\n

Aave hikes GHO borrow rates to rescue depleted stablecoin pools<\/h3>\n<\/p>\n

<\/span> <\/div>\n

There is also a distinction between a quoted funding comparison and an allowed borrowing route. LlamaRisk\u2019s recommended new Aave borrowing category, E-Mode 9, lists USDT0, GHO and USDC as borrowable assets. USDG is absent from that proposed list, so its rate provides a cost comparison rather than proof of eligibility for the February configuration.<\/p>\n

How leverage and rewards change returns<\/h2>\n

The 2.98% annualized PT yield corresponds to about 1.11% gross appreciation over the roughly 137.1 days from the Oct. 10 snapshot to Feb. 25. The annual figure should not be mistaken for the cash return available over that shorter holding period.<\/p>\n

A standalone PT-and-debt illustration shows how leverage changes the outcome. It holds the displayed borrowing APYs constant through maturity, excludes rewards, transaction costs and retained YT, and assumes no rebalancing. Two times exposure means assets equal twice starting equity and debt equals that equity; five times exposure means debt equals four times starting equity.<\/p>\n

Using the APY convention in Pendle\u2019s calculation documentation, the illustration converts each annualized rate into a return over the same holding period. It then subtracts the debt\u2019s interest cost from the PT position\u2019s appreciation.<\/p>\n\n\n\n\n\n\n\n
Funding comparison<\/th>\nBorrow APY, Oct. 10<\/th>\nReturn on equity at 2x exposure<\/th>\nReturn on equity at 5x exposure<\/th>\n<\/tr>\n<\/thead>\n
USDT0<\/td>\n4.12%<\/td>\n+0.69%<\/td>\n-0.56%<\/td>\n<\/tr>\n
USDC<\/td>\n5.87%<\/td>\n+0.05%<\/td>\n-3.11%<\/td>\n<\/tr>\n
USDG, comparator only<\/td>\n3.75%<\/td>\n+0.83%<\/td>\n-0.02%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The table shows illustrative total returns through Feb. 25. Without borrowing, the same PT position earns about 1.11% before costs. At two times exposure, the return on the investor\u2019s own capital can still cover the negative spread on the borrowed portion. At five times exposure, financing consumes more than the gross PT gain in all three examples.<\/p>\n