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Openai/6973721c-28b0-8007-a991-09211709d274
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===== A) You’re short funding + long a “zero-coupon bond” ===== A Pendle PT is like a zero-coupon bond: you buy it at a discount and it converges toward redeemable value at maturity. docs.pendle.finance<ref>{{cite web|title=docs.pendle.finance|url=https://docs.pendle.finance/ProtocolMechanics/YieldTokenization/PT/|publisher=docs.pendle.finance|access-date=2026-01-23}}</ref> Looping = levering that convergence trade, but you’re also short the borrow rate (variable funding). Failure mode: borrow APR spikes (utilization shock) while PT implied yield compresses → carry turns negative, you de-lever into bad liquidity.
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